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Mondelez (MDLZ) Q1 Earnings Top Estimates, Organic Sales Grow
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Mondelez International, Inc. (MDLZ - Free Report) began 2024 on a strong note, with the first-quarter top and bottom lines rising year over year and surpassing the respective Zacks Consensus Estimate.
Robust top-line results, earnings and free cash flow generation can be attributed to effective pricing strategies, efficient cost management and impressive momentum in emerging markets. Despite encountering a challenging and dynamic operating environment, management remained focused on executing the long-term growth strategy. The company continues to reinvest in its brands, expand distribution channels and leverage synergies from recent acquisitions to ensure sustainable long-term growth.
During the quarter, Mondelez’s core categories of chocolate, biscuit and baked snacks continued to show significant resilience and lower elasticity compared to the broader food universe. Management stated that consumer confidence varies by region, with North America and Australia/New Zealand displaying mixed signals, Europe seeing improvement and emerging markets remaining robust.
In several markets, shoppers are becoming increasingly price-sensitive, leading them to choose smaller pack sizes in both biscuits and chocolates. Meanwhile, snacking category consumers remain extremely loyal to the brands they love.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Adjusted earnings came in at 95 cents per share, which increased 16.3% on a constant-currency (cc) basis. The metric also surpassed the Zacks Consensus Estimate of 88 cents per share. The upside was mainly backed by solid operating gains, reduced interest expenses and a lower number of shares outstanding, partly offset by elevated taxes.
Net revenues advanced 1.4% year over year to $9,290 million, which beat the Zacks Consensus Estimate of $9,148 million. The uptick was driven by organic net revenue growth of 4.2% and increased sales from a short-term distributor deal associated with the sale of the company’s developed market gum business. These were somewhat offset by adverse currency movements and the impact of the developed market gum business divestiture. Our model suggested organic net revenue growth of 2.6% for the first quarter.
Organic revenue growth was backed by favorable pricing actions (up 6.3 percentage points or pp), somewhat offset by the unfavorable volume/mix (down 2.1 pp).
Revenues from emerging markets increased 3.8% to $3,733 million while rising 8.3% on an organic basis due to growth in several key markets. Revenues from developed markets dipped 0.2% to $5,557 million while increasing 1.4% on an organic basis, reflecting robust growth from Europe, North America growth channels and Canada.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa and Europe increased 8.9%, 0.6% and 1.8%, respectively. In the North America regions, revenues dropped 2.1%. On an organic basis, revenues rose 7.1%, 5.9%, 4.4% and 1.3% in Latin America, Asia, the Middle East & Africa, Europe and North America, respectively.
The adjusted gross profit increased 9.5% to $3,629 million. The adjusted gross profit margin expanded 240 bps to 39.2% due to pricing and reduced manufacturing expenses. These were somewhat offset by increased raw material and transportation costs. Our model also suggested an adjusted gross margin of 39.2% for the quarter under review.
Mondelez’s adjusted operating income increased 12.2% to $1,710 million, while the adjusted operating income margin expanded 160 bps to 18.5%. The upside can mainly be attributed to increased net pricing and reduced manufacturing costs. These were somewhat offset by input cost inflation, as well as increased advertising and consumer promotion costs.
Other Financials
The company ended the quarter with cash and cash equivalents of $1,376 million, long-term debt of $16,781 million and total equity of $28,514 million. MDLZ provided $1,324 million of net cash from operating activities for the three months ended Mar 31, 2024. Free cash flow was $1 billion for the same period. Management expects adjusted free cash flow of more than $3.5 billion for 2024.
The company returned $1.1 billion to shareholders in cash dividends and share repurchases during the reported quarter. Management expects to make share buybacks of $2 billion in 2024.
Guidance
Mondelez expects 2024 organic net revenue growth in the upper range of 3-5%. The company remains on track with its pricing strategies to counter input cost inflation by leveraging headline price as well as revenue growth management. The organic revenue growth guidance continues to assume the ongoing customer-related challenges in Europe and sluggish growth in some parts of the United States.
The company envisions high-single-digit adjusted earnings per share (EPS) growth on a cc basis. Currency movements are likely to adversely impact net revenues by nearly 1.5% and adjusted EPS by around 10 cents in 2024.
For 2024, MDLZ continues expecting high single-digit inflation. Interest expenses are expected to be around $300 million in 2024, with the adjusted tax rate likely to be in the mid-20s rate.
Shares of this Zacks Rank #4 (Sell) company have tumbled 6.4% in the past three months compared to the industry’s growth of 11.1%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Colgate-Palmolive (CL - Free Report) , Vital Farms Inc. (VITL - Free Report) and Celsius Holdings, Inc. (CELH - Free Report) .
Colgate-Palmolive, which manufactures and sells consumer products, currently carries a Zacks Rank #2 (Buy). CL delivered a positive earnings surprise of 4.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings calls for growth of 3.6% and nearly 11.7%, respectively, from the year-ago reported numbers.
Vital Farms offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 15% and nearly 43.8%, respectively, from the year-ago reported numbers.
Celsius Holdings, which develops, processes, markets, distributes and sells functional energy drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings implies growth of 41.6% each from the year-ago reported numbers.
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Mondelez (MDLZ) Q1 Earnings Top Estimates, Organic Sales Grow
Mondelez International, Inc. (MDLZ - Free Report) began 2024 on a strong note, with the first-quarter top and bottom lines rising year over year and surpassing the respective Zacks Consensus Estimate.
Robust top-line results, earnings and free cash flow generation can be attributed to effective pricing strategies, efficient cost management and impressive momentum in emerging markets. Despite encountering a challenging and dynamic operating environment, management remained focused on executing the long-term growth strategy. The company continues to reinvest in its brands, expand distribution channels and leverage synergies from recent acquisitions to ensure sustainable long-term growth.
During the quarter, Mondelez’s core categories of chocolate, biscuit and baked snacks continued to show significant resilience and lower elasticity compared to the broader food universe. Management stated that consumer confidence varies by region, with North America and Australia/New Zealand displaying mixed signals, Europe seeing improvement and emerging markets remaining robust.
In several markets, shoppers are becoming increasingly price-sensitive, leading them to choose smaller pack sizes in both biscuits and chocolates. Meanwhile, snacking category consumers remain extremely loyal to the brands they love.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Quarter in Detail
Adjusted earnings came in at 95 cents per share, which increased 16.3% on a constant-currency (cc) basis. The metric also surpassed the Zacks Consensus Estimate of 88 cents per share. The upside was mainly backed by solid operating gains, reduced interest expenses and a lower number of shares outstanding, partly offset by elevated taxes.
Net revenues advanced 1.4% year over year to $9,290 million, which beat the Zacks Consensus Estimate of $9,148 million. The uptick was driven by organic net revenue growth of 4.2% and increased sales from a short-term distributor deal associated with the sale of the company’s developed market gum business. These were somewhat offset by adverse currency movements and the impact of the developed market gum business divestiture. Our model suggested organic net revenue growth of 2.6% for the first quarter.
Organic revenue growth was backed by favorable pricing actions (up 6.3 percentage points or pp), somewhat offset by the unfavorable volume/mix (down 2.1 pp).
Revenues from emerging markets increased 3.8% to $3,733 million while rising 8.3% on an organic basis due to growth in several key markets. Revenues from developed markets dipped 0.2% to $5,557 million while increasing 1.4% on an organic basis, reflecting robust growth from Europe, North America growth channels and Canada.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa and Europe increased 8.9%, 0.6% and 1.8%, respectively. In the North America regions, revenues dropped 2.1%. On an organic basis, revenues rose 7.1%, 5.9%, 4.4% and 1.3% in Latin America, Asia, the Middle East & Africa, Europe and North America, respectively.
The adjusted gross profit increased 9.5% to $3,629 million. The adjusted gross profit margin expanded 240 bps to 39.2% due to pricing and reduced manufacturing expenses. These were somewhat offset by increased raw material and transportation costs. Our model also suggested an adjusted gross margin of 39.2% for the quarter under review.
Mondelez’s adjusted operating income increased 12.2% to $1,710 million, while the adjusted operating income margin expanded 160 bps to 18.5%. The upside can mainly be attributed to increased net pricing and reduced manufacturing costs. These were somewhat offset by input cost inflation, as well as increased advertising and consumer promotion costs.
Other Financials
The company ended the quarter with cash and cash equivalents of $1,376 million, long-term debt of $16,781 million and total equity of $28,514 million. MDLZ provided $1,324 million of net cash from operating activities for the three months ended Mar 31, 2024. Free cash flow was $1 billion for the same period. Management expects adjusted free cash flow of more than $3.5 billion for 2024.
The company returned $1.1 billion to shareholders in cash dividends and share repurchases during the reported quarter. Management expects to make share buybacks of $2 billion in 2024.
Guidance
Mondelez expects 2024 organic net revenue growth in the upper range of 3-5%. The company remains on track with its pricing strategies to counter input cost inflation by leveraging headline price as well as revenue growth management. The organic revenue growth guidance continues to assume the ongoing customer-related challenges in Europe and sluggish growth in some parts of the United States.
The company envisions high-single-digit adjusted earnings per share (EPS) growth on a cc basis. Currency movements are likely to adversely impact net revenues by nearly 1.5% and adjusted EPS by around 10 cents in 2024.
For 2024, MDLZ continues expecting high single-digit inflation. Interest expenses are expected to be around $300 million in 2024, with the adjusted tax rate likely to be in the mid-20s rate.
Shares of this Zacks Rank #4 (Sell) company have tumbled 6.4% in the past three months compared to the industry’s growth of 11.1%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely Colgate-Palmolive (CL - Free Report) , Vital Farms Inc. (VITL - Free Report) and Celsius Holdings, Inc. (CELH - Free Report) .
Colgate-Palmolive, which manufactures and sells consumer products, currently carries a Zacks Rank #2 (Buy). CL delivered a positive earnings surprise of 4.4% in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings calls for growth of 3.6% and nearly 11.7%, respectively, from the year-ago reported numbers.
Vital Farms offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 155.4%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 15% and nearly 43.8%, respectively, from the year-ago reported numbers.
Celsius Holdings, which develops, processes, markets, distributes and sells functional energy drinks and liquid supplements, currently carries a Zacks Rank #2. CELH has a trailing four-quarter earnings surprise of 67.4%, on average.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings implies growth of 41.6% each from the year-ago reported numbers.