Mondelez International, Inc. MDLZ reported third-quarter 2020 results, with the top line surpassing the Zacks Consensus Estimate for the eighth successive time. Also, sales increased year over year. The bottom line was in line with the consensus mark during the quarter. However, earnings declined year over year. The company witnessed growth in developed markets, while performance in the emerging markets improved sequentially in the third quarter.
Adjusted earnings came in at 63 cents per share, down 1.6% on year over year. The metric was in line with the Zacks Consensus Estimate of 63 cents. On a constant-currency (cc) basis, adjusted earnings were flat year over year on the back of operating gains, which were offset by unfavorable taxes.
Net revenues increased 4.9% year over year to $6,665 million. Sales surpassed the Zacks Consensus Estimate of $6,493.5 million. The upside was driven by strong organic net revenue growth of 4.4%. Favorable volumes and pricing were somewhat offset by unfavorable mix.
Revenues from emerging markets declined 3.1% to $2,289 million, while the same increased 5.3% on an organic basis. Revenues from developed markets increased 9.6% to $4,376 million, while the same rose 3.8% on an organic basis.
Regional-wise, revenues in Asia, Middle East & Africa, Europe and North America increased 3.6%, 6.3% and 12.9% year over year, respectively. However, the same declined 17.1% in Latin America. On an organic basis, revenues increased 3.1%, 4.2%, 3.4% and 6.3% in Latin America, Asia, Middle East & Africa, Europe and North America, respectively.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Adjusted gross profit increased $152 million at cc. Adjusted gross profit margin expanded 20 basis points (bps) to 39.9% thanks to volume leverage, improved pricing and enhanced productivity. However, these upsides were partially offset by escalated raw material expenses and incremental pandemic-related costs.
The company’s adjusted operating income improved $112 million at cc. Adjusted operating income margin expanded 70 bps to 17.5% led by SG&A leverage and expansion of adjusted gross profit margin.
Mondelez ended the quarter with cash and cash equivalents of $2,759 million, long-term debt of $18,916 million and total equity of $27,028 million.
The company generated cash from operating activities of $2,315 million during nine months ended Sep 30. Free cash flow was $1,685 million during the same time period.
During the quarter, the company distributed $0.4 billion to shareholders through dividend payouts. Moreover, management had decided to suspend its share buyback plans in March due to the coronavirus outbreak.
For 2020, the company projects organic net revenues to increase more than 3.5%. Further, management anticipates adjusted earnings per share (EPS) to grow more than 5% at cc. Unfavorable currency rates are expected to lower net revenue growth by nearly 3% while adjusted EPS is likely to have a negative impact of 4 cents by the same. Also, free cash flow in envisioned to be nearly $3 billion.
This Zacks Rank #4 (Sell) stock has lost 2.6% year to date compared with the industry’s decline of 8.8%.
Solid Food Stocks
United Natural Foods UNFI, with a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 4.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Flowers Foods FLO with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 8.2%, on average.
Lamb Weston LW, with a Zacks Rank #2, has a long-term earnings growth rate of 7%.
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