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Mondelez's (MDLZ) Q3 Earnings Beat Estimates, Sales Down Y/Y
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Mondelez International, Inc. (MDLZ - Free Report) reported third-quarter 2018 results, with earnings beating the Zacks Consensus Estimate and improving year over year. Improved pricing and productivity savings aided quarterly results.
Notably, this marks the company’s seventh straight quarter of positive bottom-line surprise. The company’s bottom-line performance has been impressive for almost a year. These aspects have boosted investors’ optimism in this Zacks Rank #3 (Hold) company. Mondelez’s shares have gained 4.1% in the past six months compared with the industry’s rise of 3.9%.
However, the company’s top-line performance in the reported quarter was dismal, as it lagged estimates and declined year on year. The downside was primarily caused by weak regional revenues. Nevertheless, from an organic perspective, the top line marked an improvement.
Q3 Performance
Adjusted earnings of 62 cents per share beat the Zacks Consensus Estimate of 61 cents. On a constant-currency (cc) basis, adjusted earnings grew almost 18%, primarily driven by benefits from taxes, fewer outstanding shares and operating gains.
Net revenues declined 3.7% year over year to $6,288 million and lagged the Zacks Consensus Estimate of $6,330 million. Nevertheless, on an organic basis, revenues rose 1.2%.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Revenues from the emerging markets declined 4.9% to $2,325 million. Nevertheless, on an organic basis, revenues in the emerging markets increased 6%, backed by favorable volumes and pricing in several regions. Revenues from the developed markets fell 3% to $3,963, while on an organic basis the same declined 1.7%.
Regionally, revenues in Europe, North America, Latin America and Asia, Middle East & Africa declined 3.3%, 1.1%, 14.8% and 0.5%, respectively. Nonetheless, on an organic basis, revenues across these regions, except North America, depicted improvements.
From a category perspective, the company witnessed growth across biscuits and chocolate, while the gum and candy businesses remained almost flat. Together, these propelled the company’s snacking business to grow approximately 2.7%.
Gross profit in the quarter under review was $2,414 million, down 5.3% from the year-ago quarter’s tally. Adjusted gross margin was 40.6%, up 110 basis points (bps) year on year, driven by productivity savings and higher pricing. Further, the company continued to gain from higher cocoa cost, which offset higher logistics expenses. Management stated that it continues to strike the right balance between volume and profit through disciplined pricing.
Also, the company’s operating income totaled $737 million, down 37.1% from the prior-year quarter’s figure. Nevertheless, adjusted operating margin expanded 40 bps year over year to 17.1% on the back of pricing and productivity savings, partially countered by other expenses.
Other Financials
Mondelez reported cash and cash equivalents of $1,373 million as of Sep 30, 2018, significantly up from $761 million as of Dec 31, 2017.
Further, during the third quarter, the company returned almost $800 million to shareholders, through common stock repurchases and cash dividends.
Guidance
Management expects organic net revenue growth of 2% for 2018. It had earlier projected growth at the higher end of 1-2%. Further, management continues to anticipate currency fluctuations to affect net revenue growth in 2018 by almost 1%, with a negative impact of 2 cents on adjusted earnings per share (EPS).
Nevertheless, management continues to anticipate a double-digit growth in currency-neutral adjusted EPS. Further, adjusted operating margin is expected to be 17%.
Apart from this, the company continues to expect 2018 free cash flow of approximately $2.8 billion.
McCormick & Company, Incorporated (MKC - Free Report) has long-term EPS growth rate of 9% and a Zacks Rank #2 (Buy).
Ollie’s Bargain Outlet (OLLI - Free Report) , a Zacks Rank #2 stock, has delivered positive earnings surprises in the past four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Mondelez's (MDLZ) Q3 Earnings Beat Estimates, Sales Down Y/Y
Mondelez International, Inc. (MDLZ - Free Report) reported third-quarter 2018 results, with earnings beating the Zacks Consensus Estimate and improving year over year. Improved pricing and productivity savings aided quarterly results.
Notably, this marks the company’s seventh straight quarter of positive bottom-line surprise. The company’s bottom-line performance has been impressive for almost a year. These aspects have boosted investors’ optimism in this Zacks Rank #3 (Hold) company. Mondelez’s shares have gained 4.1% in the past six months compared with the industry’s rise of 3.9%.
However, the company’s top-line performance in the reported quarter was dismal, as it lagged estimates and declined year on year. The downside was primarily caused by weak regional revenues. Nevertheless, from an organic perspective, the top line marked an improvement.
Q3 Performance
Adjusted earnings of 62 cents per share beat the Zacks Consensus Estimate of 61 cents. On a constant-currency (cc) basis, adjusted earnings grew almost 18%, primarily driven by benefits from taxes, fewer outstanding shares and operating gains.
Net revenues declined 3.7% year over year to $6,288 million and lagged the Zacks Consensus Estimate of $6,330 million. Nevertheless, on an organic basis, revenues rose 1.2%.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. Price, Consensus and EPS Surprise | Mondelez International, Inc. Quote
Revenues from the emerging markets declined 4.9% to $2,325 million. Nevertheless, on an organic basis, revenues in the emerging markets increased 6%, backed by favorable volumes and pricing in several regions. Revenues from the developed markets fell 3% to $3,963, while on an organic basis the same declined 1.7%.
Regionally, revenues in Europe, North America, Latin America and Asia, Middle East & Africa declined 3.3%, 1.1%, 14.8% and 0.5%, respectively. Nonetheless, on an organic basis, revenues across these regions, except North America, depicted improvements.
From a category perspective, the company witnessed growth across biscuits and chocolate, while the gum and candy businesses remained almost flat. Together, these propelled the company’s snacking business to grow approximately 2.7%.
Gross profit in the quarter under review was $2,414 million, down 5.3% from the year-ago quarter’s tally. Adjusted gross margin was 40.6%, up 110 basis points (bps) year on year, driven by productivity savings and higher pricing. Further, the company continued to gain from higher cocoa cost, which offset higher logistics expenses. Management stated that it continues to strike the right balance between volume and profit through disciplined pricing.
Also, the company’s operating income totaled $737 million, down 37.1% from the prior-year quarter’s figure. Nevertheless, adjusted operating margin expanded 40 bps year over year to 17.1% on the back of pricing and productivity savings, partially countered by other expenses.
Other Financials
Mondelez reported cash and cash equivalents of $1,373 million as of Sep 30, 2018, significantly up from $761 million as of Dec 31, 2017.
Further, during the third quarter, the company returned almost $800 million to shareholders, through common stock repurchases and cash dividends.
Guidance
Management expects organic net revenue growth of 2% for 2018. It had earlier projected growth at the higher end of 1-2%. Further, management continues to anticipate currency fluctuations to affect net revenue growth in 2018 by almost 1%, with a negative impact of 2 cents on adjusted earnings per share (EPS).
Nevertheless, management continues to anticipate a double-digit growth in currency-neutral adjusted EPS. Further, adjusted operating margin is expected to be 17%.
Apart from this, the company continues to expect 2018 free cash flow of approximately $2.8 billion.
Greedy for Consumer Staples Stocks? Check These
The Chefs' Warehouse, Inc (CHEF - Free Report) , with long-term EPS growth rate of 19%, flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McCormick & Company, Incorporated (MKC - Free Report) has long-term EPS growth rate of 9% and a Zacks Rank #2 (Buy).
Ollie’s Bargain Outlet (OLLI - Free Report) , a Zacks Rank #2 stock, has delivered positive earnings surprises in the past four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>