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Mondelez (MDLZ) Q2 Earnings Beat, Volume Growth Aids Revenues
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Mondelez International, Inc. (MDLZ - Free Report) reported second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year. The company posted impressive results on the back of volume growth as well as strong performance across major market regions and product categories.
Notably, shares went up 3.6% post trading session on Jul 25. Also, the company’s shares increased 4.8% in the past three months, almost in line with the industry’s rise. The upside can be attributed to the company’s efforts to enhance brand performance and stringent cost-control measures that have been yielding. This is also evident from the company’s solid past record.
Notably, the second quarter marks the company’s sixth straight quarter of positive bottom-line surprise. The top line surpassed estimates for the second time in a row. The company’s year-on-year top- and bottom-line performance has also been quite impressive for almost a year.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Adjusted earnings of 56 cents per share beat the Zacks Consensus Estimate of 54 cents. On a constant-currency (cc) basis, adjusted earnings grew almost 15%, primarily driven by revenue surge, improved gross margin and disciplined management of SG&A expenses.
Net revenues increased 2.1% year over year to $6,112 million and surpassed the Zacks Consensus Estimate of $6,077 million. On an organic basis, revenues rose 3.5% buoyed by solid volumes and pricing.
Revenues in the emerging markets inched up 0.2%, while developed markets grew 3.3%. Revenues in power brands rose 5.2%.
Regionally, Europe and North America registered an increase of 6.1% and 6.5% in revenues, respectively. However, revenues in Latin America and Asia, Middle East & Africa declined 8.7% and 2.4% respectively.
Also, from a category perspective, the quarter witnessed growth across biscuits, chocolate, gum and candy businesses. Together, these propelled the company’s snacking business as a whole to grow more than 3%.
Gross profit in the quarter under review was $2,540 million, up 9.8% from the year-ago quarter’s tally. Adjusted gross margin was 40.4%, up 60 basis points (bps) year on year, driven by enhanced volume leverage and productivity savings.
Also, the company’s operating income totaled $481 million, down 24.4% from the prior-year quarter’s figure. Nevertheless, adjusted operating margin expanded 130 bps year over year to 16.7% on the back of lower selling, general & administrative costs and productivity savings.
In order to maintain strong margins, management stated that it will continue to execute zero-based budgeting (ZBB) program and selectively engage in SG&A spending.
Other Financials
Mondelez reported cash and cash equivalents of $1,246 million as of Jun 30, 2018, significantly up from $761 million as of Dec 31, 2017.
Further, the company repurchased common stock worth $650 million and paid cash dividends of almost $300 million during the second quarter.
Additionally, the company hiked quarterly dividend rates by 18%, concurrent to the earnings release. The revised quarterly cash dividend of 26 cents per share is payable on Oct 12, 2018 to shareholders held in record as on Sep 28, 2018.
Guidance
Propelled by the robust second-quarter performance, management now expects organic net revenue growth for 2018 at the higher end of the prior guidance of 1-2%. However, management anticipates currency fluctuations to negatively impact net revenue growth in 2018 by almost 1%.
Nevertheless, management continues to anticipate a double-digit growth in currency-neutral adjusted earnings per share. 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.
Mondelez currently carries a Zacks Rank #4 (Sell), which is subject to change following the company’s robust second-quarter performance. Until then, investors can bet on better-ranked stocks in the consumer staples space.
Pinnacle Foods Inc , with long-term earnings per share growth rate of 8%, also carries a Zacks Rank #2.
B&G Foods, Inc. (BGS - Free Report) a Zacks Rank #2 company, delivered an average positive earnings surprise of 0.7% in the trailing 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 (MDLZ) Q2 Earnings Beat, Volume Growth Aids Revenues
Mondelez International, Inc. (MDLZ - Free Report) reported second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year. The company posted impressive results on the back of volume growth as well as strong performance across major market regions and product categories.
Notably, shares went up 3.6% post trading session on Jul 25. Also, the company’s shares increased 4.8% in the past three months, almost in line with the industry’s rise. The upside can be attributed to the company’s efforts to enhance brand performance and stringent cost-control measures that have been yielding. This is also evident from the company’s solid past record.
Notably, the second quarter marks the company’s sixth straight quarter of positive bottom-line surprise. The top line surpassed estimates for the second time in a row. The company’s year-on-year top- and bottom-line performance has also been quite impressive for almost a year.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. Price, Consensus and EPS Surprise | Mondelez International, Inc. Quote
Q2 Performance
Adjusted earnings of 56 cents per share beat the Zacks Consensus Estimate of 54 cents. On a constant-currency (cc) basis, adjusted earnings grew almost 15%, primarily driven by revenue surge, improved gross margin and disciplined management of SG&A expenses.
Net revenues increased 2.1% year over year to $6,112 million and surpassed the Zacks Consensus Estimate of $6,077 million. On an organic basis, revenues rose 3.5% buoyed by solid volumes and pricing.
Revenues in the emerging markets inched up 0.2%, while developed markets grew 3.3%. Revenues in power brands rose 5.2%.
Regionally, Europe and North America registered an increase of 6.1% and 6.5% in revenues, respectively. However, revenues in Latin America and Asia, Middle East & Africa declined 8.7% and 2.4% respectively.
Also, from a category perspective, the quarter witnessed growth across biscuits, chocolate, gum and candy businesses. Together, these propelled the company’s snacking business as a whole to grow more than 3%.
Gross profit in the quarter under review was $2,540 million, up 9.8% from the year-ago quarter’s tally. Adjusted gross margin was 40.4%, up 60 basis points (bps) year on year, driven by enhanced volume leverage and productivity savings.
Also, the company’s operating income totaled $481 million, down 24.4% from the prior-year quarter’s figure. Nevertheless, adjusted operating margin expanded 130 bps year over year to 16.7% on the back of lower selling, general & administrative costs and productivity savings.
In order to maintain strong margins, management stated that it will continue to execute zero-based budgeting (ZBB) program and selectively engage in SG&A spending.
Other Financials
Mondelez reported cash and cash equivalents of $1,246 million as of Jun 30, 2018, significantly up from $761 million as of Dec 31, 2017.
Further, the company repurchased common stock worth $650 million and paid cash dividends of almost $300 million during the second quarter.
Additionally, the company hiked quarterly dividend rates by 18%, concurrent to the earnings release. The revised quarterly cash dividend of 26 cents per share is payable on Oct 12, 2018 to shareholders held in record as on Sep 28, 2018.
Guidance
Propelled by the robust second-quarter performance, management now expects organic net revenue growth for 2018 at the higher end of the prior guidance of 1-2%. However, management anticipates currency fluctuations to negatively impact net revenue growth in 2018 by almost 1%.
Nevertheless, management continues to anticipate a double-digit growth in currency-neutral adjusted earnings per share. 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.
Mondelez currently carries a Zacks Rank #4 (Sell), which is subject to change following the company’s robust second-quarter performance. Until then, investors can bet on better-ranked stocks in the consumer staples space.
Looking for Consumer Staple Stocks? Check These
Lamb Weston Holdings Inc (LW - Free Report) , with long-term earnings per share growth rate of 12.2%, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pinnacle Foods Inc , with long-term earnings per share growth rate of 8%, also carries a Zacks Rank #2.
B&G Foods, Inc. (BGS - Free Report) a Zacks Rank #2 company, delivered an average positive earnings surprise of 0.7% in the trailing 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 >>