Mondelez Will Cut Costs to Improve Profit
12 Feb 2015 --- Mondelez International, which controversially took British chocolate maker Cadbury’s over in 2010, has reported a better-than-expected adjusted quarterly profit and said it expects cost cuts to boost its full-year adjusted operating margin in 2015.
On a reported basis, net revenues were $34.2 billion, down 3%, including a negative 5.1 percentage point impact from currency. Operating income was $3.2 billion, down 18.4%, including a negative 12.4 percentage point impact from restructuring costs and a negative 8.7 percentage point impact from cycling the prior-year reversal of an indemnity accrual related to the 2010 acquisition of Cadbury.
Profits were hit by difficult currency conditions and increased ingredients costs, but the company did increase its own prices in 2014 in order to buffer some of the impact.
"In 2014, we delivered strong earnings growth, margin expansion and cash flow in a challenging consumer and retail environment by driving record net productivity and aggressively reducing overheads," said Irene Rosenfeld, Chairman and CEO. "At the same time, we delivered organic net revenue growth in line with our expectations as we raised prices to recover higher input costs, protect profitability and ensure the health of our franchises.
"As we execute our transformation agenda in 2015, we expect to deliver modest organic revenue growth as well as solid margin expansion and strong constant-currency earnings growth. We remain on a clear path to achieve our 2016 margin target and to drive sustainable earnings and revenue growth over the long term. We're continuing to execute our cost-reduction initiatives to expand margins and to make the necessary foundational investments in our brands, innovation platforms, routes to market and supply chain, so we're well-positioned to accelerate revenue growth as consumer demand improves."
Mondelez said it expects organic net revenue to grow at least 2 percent in 2015, helped by a decision to focus on its snacks business.
