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Mondelez (MDLZ) Q4 Earnings and Revenues Miss Estimates
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Mondelez International, Inc. (MDLZ - Free Report) reported fourth-quarter 2016 results wherein earnings and revenues missed the Zacks Consensus Estimate. The underperformance was mainly due to a stronger dollar that impacted sales value outside the U.S.
Earnings Details
Fourth-quarter adjusted earnings of 47 cents per share missed the Zacks Consensus Estimate of 49 cents by 4.1%.
On a constant currency basis, earnings grew 11.9%, primarily driven by operating gains.
Mondelez is aggressively reducing costs under its $3.5 billion restructuring plan, which was announced in 2014. Per the plan, the company is accelerating supply chain cost savings and reducing overhead costs through layoffs, asset disposals and implementation of a zero-based budgeting system (ZBB). The savings from the program are being used to fund marketing investments and capacity expansion to accelerate top-line growth and boost market share.
Full-year adjusted earnings came in at $1.94 per share, reflecting an increase of 24.1% on a constant currency basis.
Net revenue decreased 8.1% year over year to $6.77 billion due to negative currency impact and deconsolidation of the company's Venezuelan operations.
Revenues missed the Zacks Consensus Estimate of $6.87 billion by 1.5%.
Organic revenues inched up 0.6% (including Power Brands growth of almost 2%), less than 1.1% recorded in the last quarter. This can be mainly attributed to a significant impact of India’s demonetization move and deterioration in selected markets.
Pricing increased 1.1%, higher than 0.6% recorded in the previous quarter. Volume mix decreased 0.5%.
Full-year revenues came in at $25.92 billion, down 12.5% year over year.
Margins
Adjusted gross margin decreased 30 basis points (bps) year over year to 39% as strong net productivity was primarily offset by pricing investments and unfavorable mix impacts.
However, adjusted operating income grew 9.9% year over year on a constant currency basis to $973 million. Adjusted operating margin increased 110 bps year over year to 14.4% on the back continued reduction in overhead costs, driven by the ongoing benefits from zero-based budgeting and increased shared service activities, along with supply chain productivity savings.
Financials
The company reported cash and cash equivalents of $1.74 billion as on Dec 31, 2016, down from $1.87 billion at 2015-end.
Free cash flow was $1.6 billion driven by strong working capital management.
The company returned $3.7 billion of capital to shareholders through share repurchases and dividends in 2016.
2017 Guidance
Organic net revenue is expected to increase 1% in 2017. Foreign currency is likely to hurt net revenue by roughly 1%.
Adjusted operating margin is still expected in the mid 16% range.
Management expects adjusted earnings to increase at a double-digit rate on a constant-currency basis. Currency headwinds are now expected to hurt adjusted earnings by about 3 cents.
The company is on track to achieve adjusted operating margin between 17% and 18% in 2018.
Mondelez believes that its wide global reach, economic uncertainty in India owing to demonetization and in the U.K. due to Brexit have weighed on its business.
The company spans across 165 countries and operates factories all over the world. President Donald Trump’s planned changes to taxes and tariffs could have an adverse effect on the company’s global trade. Mondelez’s operations in Mexico and other countries could be affected.
The Hershey Company’s (HSY - Free Report) fourth-quarter 2016 earnings beat the Zacks Consensus Estimate while sales missed the same. Earnings benefited from higher sales in North America. Hershey’s fourth-quarter adjusted earnings per share of $1.17 also beat the year-ago profit of $1.08 by 8.3%.
Upcoming Peer Releases
The Kraft Heinz Company (KHC - Free Report) is scheduled to report fourth-quarter 2016 results on Feb 15.
Pinnacle Foods, Inc. is slated to report its quarterly numbers on Feb 23.
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Mondelez (MDLZ) Q4 Earnings and Revenues Miss Estimates
Mondelez International, Inc. (MDLZ - Free Report) reported fourth-quarter 2016 results wherein earnings and revenues missed the Zacks Consensus Estimate. The underperformance was mainly due to a stronger dollar that impacted sales value outside the U.S.
Earnings Details
Fourth-quarter adjusted earnings of 47 cents per share missed the Zacks Consensus Estimate of 49 cents by 4.1%.
On a constant currency basis, earnings grew 11.9%, primarily driven by operating gains.
Mondelez is aggressively reducing costs under its $3.5 billion restructuring plan, which was announced in 2014. Per the plan, the company is accelerating supply chain cost savings and reducing overhead costs through layoffs, asset disposals and implementation of a zero-based budgeting system (ZBB). The savings from the program are being used to fund marketing investments and capacity expansion to accelerate top-line growth and boost market share.
Full-year adjusted earnings came in at $1.94 per share, reflecting an increase of 24.1% on a constant currency basis.
Sales Details
Net revenue decreased 8.1% year over year to $6.77 billion due to negative currency impact and deconsolidation of the company's Venezuelan operations.
Revenues missed the Zacks Consensus Estimate of $6.87 billion by 1.5%.
Organic revenues inched up 0.6% (including Power Brands growth of almost 2%), less than 1.1% recorded in the last quarter. This can be mainly attributed to a significant impact of India’s demonetization move and deterioration in selected markets.
Pricing increased 1.1%, higher than 0.6% recorded in the previous quarter. Volume mix decreased 0.5%.
Full-year revenues came in at $25.92 billion, down 12.5% year over year.
Margins
Adjusted gross margin decreased 30 basis points (bps) year over year to 39% as strong net productivity was primarily offset by pricing investments and unfavorable mix impacts.
However, adjusted operating income grew 9.9% year over year on a constant currency basis to $973 million. Adjusted operating margin increased 110 bps year over year to 14.4% on the back continued reduction in overhead costs, driven by the ongoing benefits from zero-based budgeting and increased shared service activities, along with supply chain productivity savings.
Financials
The company reported cash and cash equivalents of $1.74 billion as on Dec 31, 2016, down from $1.87 billion at 2015-end.
Free cash flow was $1.6 billion driven by strong working capital management.
The company returned $3.7 billion of capital to shareholders through share repurchases and dividends in 2016.
2017 Guidance
Organic net revenue is expected to increase 1% in 2017. Foreign currency is likely to hurt net revenue by roughly 1%.
Adjusted operating margin is still expected in the mid 16% range.
Management expects adjusted earnings to increase at a double-digit rate on a constant-currency basis. Currency headwinds are now expected to hurt adjusted earnings by about 3 cents.
The company is on track to achieve adjusted operating margin between 17% and 18% in 2018.
Mondelez believes that its wide global reach, economic uncertainty in India owing to demonetization and in the U.K. due to Brexit have weighed on its business.
The company spans across 165 countries and operates factories all over the world. President Donald Trump’s planned changes to taxes and tariffs could have an adverse effect on the company’s global trade. Mondelez’s operations in Mexico and other countries could be affected.
Mondelez currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. Price, Consensus and EPS Surprise | Mondelez International, Inc. Quote
Peer Release
The Hershey Company’s (HSY - Free Report) fourth-quarter 2016 earnings beat the Zacks Consensus Estimate while sales missed the same. Earnings benefited from higher sales in North America. Hershey’s fourth-quarter adjusted earnings per share of $1.17 also beat the year-ago profit of $1.08 by 8.3%.
Upcoming Peer Releases
The Kraft Heinz Company (KHC - Free Report) is scheduled to report fourth-quarter 2016 results on Feb 15.
Pinnacle Foods, Inc. is slated to report its quarterly numbers on Feb 23.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>