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Post Earnings Coverage as Mondelez's Operating Income Margin Totaled 16.8%; Adjusted EPS Grew 6%

Upcoming AWS Coverage on Tootsie Roll Industries

LONDON, UK / ACCESSWIRE / May 15, 2017 / Active Wall St. announces its post-earnings coverage on Mondelez International, Inc. (NASDAQ: MDLZ) as the Company reported its first quarter fiscal 2017 results on May 02, 2017. The maker of Oreo cookies, Cadbury chocolate, and Trident gum reported numbers that came in ahead of the market estimates. Register with us now for your free membership at:

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One of Mondelez International's competitors within the Confectioners space, Tootsie Roll Industries Inc. (NYSE: TR), is on AWS research report coverage watch list. AWS will initiate a report on Tootsie Roll Industries soon.

Today, AWS is promoting its earnings coverage on MDLZ; touching on TR. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended March 31, 2017, Mondelez's net revenues decreased 0.6% to $6.42 billion compared to revenue of $6.46 billion, driven by currency headwinds. The Company's organic net revenue increased 0.6%, with growth in all regions except North America. Mondelez' revenue numbers came in ahead of analysts' consensus of $6.37 billion.

For Q1 2017, Mondelez's gross profit margin was 39.4%, reflecting an increase of 10 basis points compared to the year ago same quarter primarily driven by lower restructuring program implementation costs. The Company's adjusted gross profit margin was 40.3% for the reported quarter, down 20 basis points, driven by unfavorable mix impacts and higher input costs, partially offset by strong net productivity and improved pricing.

During Q1 2017, Mondelez's operating income margin was 13.1%, up 190 basis points, reflecting the adjusted operating income gains and the benefit from the settlement of a Cadbury tax matter. The Company's adjusted operating income margin increased 90 basis points to 16.8% primarily due to continued reductions in overhead costs and supply chain productivity savings.

For Q1 2017, Mondelez reported earnings of $630 million, or $0.41 per share, compared with $554 million, or $0.35 per share, in the year-ago comparable period, driven primarily by operating gains and the benefit from the settlement of a Cadbury tax matter. Adjusted for one-time items, the Company earned $826 million, or $0.53 per share, for the reported period compared with $0.51 per share in the year ago same period; results were also ahead of Wall Street's estimates of $0.50 per share.

Segment Details

During Q1 2017, Mondelez's Europe business organic net revenue was up 1% driven by volume. Strong programming in both biscuits and chocolate had fuelled growth despite a continued deflationary environment. For Q1 2017, Europe delivered another quarter of solid margin expansion, with an increase in adjusted operating income margin of 60 basis points, with margins now standing at 19.5%, driven by strong net productivity as well as lower overheads, which offset some incremental A&C investments.

In AMEA, Mondelez's organic revenue increased 1.3% in Q1 2017, led by solid growth in India and Southeast Asia. The segment's adjusted operating income margin declined 60 basis points to 14.6%, driven primarily by increased A&C support, which offset lower overhead costs and good productivity.

Mondelez's Latin America segment organic net revenue had increased by 3.7%. Mexico grew mid-single digits, driven by solid growth in gum, candy, and meals, while Argentina grew high teens through pricing to offset currency-driven inflation. For the reported quarter, the segment's adjusted operating income margin increased over 500 basis points to nearly 16%, primarily driven by improved overhead costs and lower A&C.

During Q1 2017, Mondelez's North America region posted a decline of 1.9%, driven primarily by US biscuits, but also impacted by gum. However, the segment again delivered solid margin expansion, as adjusted operating income margin improved by 50 basis points, primarily driven by ongoing overhead savings, totaling at 20.8%.

For Q1 2017, Mondelez's Snacking category growth declined about 2.5%, significantly impacted by y-o-y calendar impact from Easter. The Company's Biscuits business posted a slight revenue decline as strong growth in countries like the UK, Japan, and Italy was offset by weakness in the US.

In chocolate, Mondelez's business grew more than 5%, driven by solid results in Germany, India, and Brazil. In addition, The Company observed good momentum with recent launches of chocolate in the US and China. During the reported quarter, Gum & Candy declined over 5%, as the Gum category continues to experience significant weakness, especially in the US.

Capital Return

During Q1 2017, Mondelez returned approximately $800 million in capital to shareholders. The Company repurchased over $470 million of its common stock and paid approximately $300 million in cash dividends. Mondelez continue to expect share repurchases of approximately $1.5 billion for the full year.

Outlook

Mondelez continues to expect organic net revenue to increase at least 1% in full year 2017 and adjusted operating income margin in the mid-16% range. The Company is also forecasting double-digit adjusted EPS growth on a constant-currency basis. Additionally, Mondelez expects free cash flow of approximately $2 billion for full year 2017.

Stock Performance

On Friday, May 12, 2017, the stock closed the trading session at $44.87, slightly up 0.47% from its previous closing price of $44.66. A total volume of 7.41 million shares have exchanged hands. Mondelez's stock price advanced 1.08% in the last month, 0.17% in the past three months, and 2.83% in the previous six months. Furthermore, since the start of the year, shares of the Company have gained 1.66%. The stock is trading at a PE ratio of 40.28 and has a dividend yield of 1.69%.

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SOURCE: Active Wall Street