Mondelez International Hurt by Weak Demand Across Europe

05 Feb 2016 --- Mondelez International has reported a 16.6 per cent drop in revenues to $7.36bn in the quarter amid weak demand across Europe. Mondelez is targeting cost reductions of around $3bn by the end of 2018, as well as offload non-core brands as well as open manufacturing plants which are efficient.

While its revenue was down by 16.6 per cent in the quarter, revenue came in ahead of analysts’ expectations.

However, it reported an operating loss of $557m in the quarter, as the impact of an accounting change in Venezuela impacted profits.

Weak demand in Europe also impacted its performance.

The maker of Ritz and Oreos warned the market that it is ready for a worsening in economic market condition across emerging markets.

Mondelez said it that expected organic growth to increase two per cent this year, which is slower than estimates of the overall market it operates in.

The company said its performance had not reached expectations partly due to focus on its higher margin and most popular offerings, like Oreos.

Irene Rosenfeld, chief executive, said: "In 2015, we delivered another year of very strong results despite the highly volatile macroeconomic environment," said Irene Rosenfeld, Chairman and CEO. "Our aggressive cost-savings programs drove significant margin expansion. In addition, we increased our marketing investments, enabling us to steadily accelerate organic revenue growth and improve our share performance as the year progressed.

 "We remain confident in our ability to execute our transformation agenda despite weakening macroeconomic conditions in emerging markets. As a result, in 2016, we expect to deliver another year of strong margin expansion and double-digit EPS growth on a constant currency basis by continuing to reduce supply chain and overhead costs. 

“ We also expect underlying organic revenue growth that's in line with our categories as we prudently invest behind our Power Brands and innovation platforms. In addition, we'll continue to build on this momentum going forward and now have clear line of sight to an Adjusted Operating Income margin of 17 to 18 percent in 2018, which represents about a 400 basis point improvement from 2015."