Shares of Mondelez International, Inc. (MDLZ Quick QuoteMDLZ - Free Report) grew 2.9% after the trading session on Jul 27, following impressive second-quarter 2023 numbers. The top and the bottom line increased year over year and beat the Zacks Consensus Estimate. Backed by stellar year-to-date performance, management raised its 2023 organic net revenues and earnings outlook. Management increased its quarterly dividend.

Quarterly results gained from broad-based strength in the company’s business, with solid profitable top-line growth across all regions and categories. Continuous reinvestment in its brands and capabilities along with effective pricing actions, cost discipline and solid volume/mix performance fueled MDLZ’s performance.

Shares of this Zacks Rank #3 (Hold) company have gained 11.6% in the past six months compared with the industry’s growth of 2.8%.

Quarter in Detail

Adjusted earnings were 76 cents per share, increasing 16.9% year over year and 21.5% on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 69 cents per share. The year-over-year upside was mainly backed by solid operating gains and reduced shares outstanding. These were somewhat offset by increased interest expenses and taxes.

Net revenues advanced 17% year over year to $8,507 million. The metric beat the Zacks Consensus Estimate of $8,194.2 million. The uptick was driven by strong organic net revenue growth of 15.8%, and increased sales from Clif Bar and Ricolino buyouts, somewhat negated by currency headwinds. Favorable pricing contributed to organic net revenues. We expected a year-over-year organic net revenue increase of 7.3%.

Revenues from emerging markets increased 17.8% to $3,306 million, while rising 23.3% on an organic basis. Revenues from developed markets moved up 16.4% to $5,201 million, while increasing 11.2% on an organic basis. We had expected a year-over-year net revenue increase from emerging markets and developed markets of 11.9% and 10.1%, respectively.

Region-wise, revenues in Latin America; Asia, the Middle East & Africa; Europe; and North America increased 40.2%, 4.8%, 11.4% and 22.7% year over year, respectively. On an organic basis, revenues increased 37.7%, 13.2%, 13.1% and 12.4% in the above-mentioned regions, respectively.

The adjusted gross profit increased $542 million at cc. The adjusted gross profit margin contracted 50 (basis points) bps to 37.5%, thanks to increased raw material and transportation costs. These were somewhat negated by pricing and reduced manufacturing expenses. We had expected adjusted gross profit margin of 35.7%.

Mondelez’s adjusted operating income rose $288 million at cc. The adjusted operating income margin expanded 60 bps to 15.7% on increased net pricing, SG&A leverage, reduced manufacturing costs stemming from productivity and favorable product mix. This was somewhat offset by input cost inflation. We had expected adjusted operating income margin of 15%.

Other Financials

The company ended the quarter with cash and cash equivalents of $1,482 million, long-term debt of $18,147 million and total equity of $28,679 million. MDLZ provided $1,973 million of net cash from operating activities for six months ended Jun 30, 2023. Free cash flow was $1,478 million for the same period. Management expects a free cash flow of more than $3.3 billion for 2023.

The company returned $0.7 billion to shareholders in cash dividends and share repurchases during the reported quarter. Management declared a quarterly cash dividend of 42.5 cents per share of Class A common stock, marking a 10% increase. This dividend is payable on Oct 13, 2023, to shareholders as of Sep 29.

Image Source: Zacks Investment Research

Guidance

Mondelez expects 2023 organic net revenues growth of more than 12% compared with growth of over 10% projected earlier. The raised outlook takes into account the impressive year-to-date performance.

Management anticipates adjusted earnings per share (EPS) growth on a cc basis of over 12%. The company had earlier expected the metric to grow over 10%. Currency movements are likely to affect net revenues by nearly 2% and adjusted EPS by 11 cents in 2023.

Some Better-Ranked Staple Bets

Here we have highlighted three better-ranked stocks, namely TreeHouse Foods, Inc. (THS Quick QuoteTHS - Free Report) , Celsius Holdings (CELH Quick QuoteCELH - Free Report) and McCormick & Company, Incorporated (MKC Quick QuoteMKC - Free Report) .

TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank #1 (Strong Buy). THS has a trailing four-quarter earnings surprise of 49.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year’s sales suggests a decline of 12.4% from the year-ago reported numbers.

Celsius Holdings, which offers functional drinks and liquid supplements, carries a Zacks Rank #2 (Buy) at present. CELH delivered an earnings surprise of 81.8% in the last reported quarter.

The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year’s sales and earnings implies surges of 69.6% and 154.4%, respectively, from the prior-year numbers.

McCormick, which operates as a manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings suggests growth of 6.4% and 5.1%, respectively, from the year-ago reported numbers.