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Can Mondelez's Productivity Gains Offset Elevated Cocoa Cost Pressure?
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Key Takeaways
Mondelez's Q2 adjusted gross margin rose 20 bps to 34%, aided by pricing and productivity.
Higher raw material, SG&A and promotion costs drove a 120-bps drop in adjusted operating margin.
Cocoa cost phasing weighed on YTD results, with adjusted operating income down 12.8% and EPS down 8.8%.
Mondelez International, Inc. [(MDLZ - Free Report) ] continues to emphasize productivity and cost discipline as important tools to manage inflationary pressures across its operations. Supply-chain modernization is also supporting manufacturing efficiencies, with the company continuing to pursue productivity and cost savings as raw material costs remain a headwind.
The benefits were evident in the second quarter of 2026. Adjusted gross profit increased $92 million at constant currency, representing growth of 3%, while adjusted gross margin expanded 20 basis points to 34%. The improvement was driven primarily by higher net pricing and lower manufacturing costs from productivity, partially offset by higher raw material costs.
Still, cost pressure remained visible further down the income statement. Adjusted operating income declined 6.1% at constant currency, while adjusted operating margin contracted 120 basis points to 13.1%. Higher raw material costs, increased selling, general and administrative expenses, and higher advertising and consumer promotion spending were only partly offset by pricing and lower manufacturing costs from productivity.
Cocoa-related pressure was more pronounced on a year-to-date basis. Adjusted gross profit declined 1.2% at constant currency, while adjusted operating income fell 12.8%, and adjusted EPS decreased 8.8%. The company specifically identified cocoa cost phasing as a primary factor affecting year-to-date profit and EPS.
Productivity gains and cost discipline are helping Mondelez absorb a portion of the pressure from elevated input costs. However, with cocoa cost phasing continuing to weigh on year-to-date profitability, the benefits from these efficiencies have so far provided only a partial offset rather than fully neutralizing the impact.
The Zacks Rank #3 (Hold) stock has risen 0.8% over the past year against the industry’s decline of 18.6%.
MDLZ Price Performance Versus Industry
Image Source: Zacks Investment Research
From a valuation standpoint, MDLZ trades at a forward price-to-earnings ratio of 19.04, above the industry’s average of 14.66.
MDLZ Valuation Compared to Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Mondelez’s current and next fiscal year earnings per share implies year-over-year growth of 4.5% and 10.8%, respectively.
Stocks to Consider
The Vita Coco Company, Inc. (COCO - Free Report) , a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1 (Strong Buy). COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings per share (EPS) calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.
Darling Ingredients Inc. (DAR - Free Report) , a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
Laird Superfood, Inc. (LSF - Free Report) is a consumer product company that develops, manufactures and markets plant-based, natural and functional food and beverage products. LSF currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and EPS suggests growth of 188.2% and 104%, respectively, from the year-ago figures. LSF delivered an earnings surprise of 100% in the last reported quarter.
View the Zacks #1 Rank List
Image: Bigstock
Can Mondelez's Productivity Gains Offset Elevated Cocoa Cost Pressure?
Key Takeaways
Mondelez International, Inc. [(MDLZ - Free Report) ] continues to emphasize productivity and cost discipline as important tools to manage inflationary pressures across its operations. Supply-chain modernization is also supporting manufacturing efficiencies, with the company continuing to pursue productivity and cost savings as raw material costs remain a headwind.
The benefits were evident in the second quarter of 2026. Adjusted gross profit increased $92 million at constant currency, representing growth of 3%, while adjusted gross margin expanded 20 basis points to 34%. The improvement was driven primarily by higher net pricing and lower manufacturing costs from productivity, partially offset by higher raw material costs.
Still, cost pressure remained visible further down the income statement. Adjusted operating income declined 6.1% at constant currency, while adjusted operating margin contracted 120 basis points to 13.1%. Higher raw material costs, increased selling, general and administrative expenses, and higher advertising and consumer promotion spending were only partly offset by pricing and lower manufacturing costs from productivity.
Cocoa-related pressure was more pronounced on a year-to-date basis. Adjusted gross profit declined 1.2% at constant currency, while adjusted operating income fell 12.8%, and adjusted EPS decreased 8.8%. The company specifically identified cocoa cost phasing as a primary factor affecting year-to-date profit and EPS.
Productivity gains and cost discipline are helping Mondelez absorb a portion of the pressure from elevated input costs. However, with cocoa cost phasing continuing to weigh on year-to-date profitability, the benefits from these efficiencies have so far provided only a partial offset rather than fully neutralizing the impact.
MDLZ Stock Price Performance, Valuation & Estimates
The Zacks Rank #3 (Hold) stock has risen 0.8% over the past year against the industry’s decline of 18.6%.
MDLZ Price Performance Versus Industry
Image Source: Zacks Investment Research
From a valuation standpoint, MDLZ trades at a forward price-to-earnings ratio of 19.04, above the industry’s average of 14.66.
MDLZ Valuation Compared to Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Mondelez’s current and next fiscal year earnings per share implies year-over-year growth of 4.5% and 10.8%, respectively.
Stocks to Consider
The Vita Coco Company, Inc. (COCO - Free Report) , a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1 (Strong Buy). COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings per share (EPS) calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.
Darling Ingredients Inc. (DAR - Free Report) , a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
Laird Superfood, Inc. (LSF - Free Report) is a consumer product company that develops, manufactures and markets plant-based, natural and functional food and beverage products. LSF currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and EPS suggests growth of 188.2% and 104%, respectively, from the year-ago figures. LSF delivered an earnings surprise of 100% in the last reported quarter.