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Mondelez (MDLZ) Q1 Earnings Top, Grows Internationally

Mondelez International, Inc. MDLZ reported fourth-quarter 2017 results, wherein earnings surpassed the Zacks Consensus Estimate and revenues came in line with the consensus mark. Adjusted earnings of 57 cents per share beat the Zacks Consensus Estimate of 56 cents. Adjusted earnings grew 21%, primarily driven by operating gains.

Sales Details

Net revenues increased 2.9% year over year to $6,966 million courtesy of the Power Brands and favorable trends in emerging markets. Emerging markets’ net revenues rose 6.3%, while Power Brands witnessed a 3.7% increase in revenues.

Regionally, Latin America, Asia, Middle East & Africa and Europe registered an increase of 4.2%, 2.6% and 5% in revenues, respectively. However, North America’s revenues declined 0.6%.

Reported total revenues were almost on par with the Zacks Consensus Estimate of $6,973 million.

Organic revenues increased 2.4%, softer than 2.8% in the last quarter. The improvement was primarily driven by Power Brands as well as strong performance in Latin America and Asia, Middle East & Africa.

Pricing increased 2.1 percentage points (pp), more than 1.5 pp in the previous quarter. Volume/Mix had a positive impact of 0.3 pp to the revenues. In the prior quarter, it was 1.3 pp in the last quarter.

Margins

Adjusted gross margin was 39.2%, which remained unchanged from the year-ago level. Higher input costs and unfavorable mix were offset by continued net productivity gains and higher pricing.

However, adjusted operating margin expanded 180 basis points (bps) year over year to 15.9% on the back of lower overhead costs owing to continued cost reduction.

Financials

Mondelez reported cash and cash equivalents of $761 million as on Dec 31, 2017, down from $1.74 billion at the end of 2016.

The company repurchased approximately $400 million of its common stock and paid approximately $300 million in cash dividends. In 2017, Mondelez returned $3.4 billion of capital to shareholders through share repurchases and dividends. Moreover, the company has given a boost to its share repurchase authorization by $6 billion to $19.7 billion from $13.7 billion, extending the expiration date of the program to Dec 31, 2020.

2017 Highlights

Full-year net revenues came in at $25.9 billion, decreasing 0.1% from 2016 level. Organically, net revenues grew 0.9%, which includes a negative impact of approximately 40 bps from the June 2017 malware incident.

Adjusted earnings were $2.14 per share, an increase of 15% year over year, driven by operating efficiencies, lower interest expense and lower shares outstanding.

2018 Guidance

Organic net revenues are expected to increase between 1% and 2%. Adjusted operating margin is expected to be 17%.

Management expects adjusted earnings to grow by double-digit on a constant currency basis. The company expects currency translation to increase net revenue growth by approximately 4% and adjusted EPS by approximately 12.3 cents.

Also, management commented on Keurig's deal to buy soda maker Dr Pepper Snapple DPS. Mondelez had a stake in Keurig before the deal and will now have a 13% to 14% stake in the new company, Keurig Dr Pepper, when the transaction closes next quarter.

Mondelez International, Inc. Price, Consensus and EPS Surprise

 

Mondelez International, Inc. Price, Consensus and EPS Surprise | Mondelez International, Inc. Quote

Zacks Rank & Peer Release

Mondelez has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Procter & Gamble Company PG, popularly known as P&G, reported second-quarter fiscal 2018 core earnings of $1.19 per share, beating the Zacks Consensus Estimate of $1.15 by 3.5%.

Upcoming Peer Release

The Hershey Company HSY is slated to report fourth quarter 2017 results on Feb 1, 2018.

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Dr Pepper Snapple Group, Inc (DPS) : Free Stock Analysis Report
 
Hershey Company (The) (HSY) : Free Stock Analysis Report
 
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
 
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
 
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