Mondelez International Reports Third Quarter Results And Confirms 2013 Guidance

9 Nov 2012 --- Mondelez International, formerly known as Kraft Foods Inc., completed the spin-off of its North American grocery business, Kraft Foods Group, Inc. Beginning in the fourth quarter 2012, Kraft Foods Group's historical financial results for periods prior to Oct. 1, 2012, will be reflected in the company's financial statements as a discontinued operation.

• Net revenues declined 2.4% to $12.9 billion; Organic Net Revenues increased 2.% 

• Operating income declined 2.7%; Adjusted Operating Income increased 6.8% 

• Diluted EPS was $0.36; Operating EPS was $0.64, up 0.3%

 

On a reported basis, including Kraft Foods Group, net revenues were $2.9 billion, down 2.4 percent, including a 4.5 percentage point headwind from currency.  Organic Net Revenues increased 2. percent.  

Operating income was $.7 billion, and operating income margin was 2.8 percent.  Adjusted Operating Income, which excludes Integration Program costs, Restructuring Program costs and Spin-Off Costs, grew 6.8 percent to $.9 billion.  Adjusted Operating Income margin increased .3 percentage points to 5.0 percent.  

Diluted EPS was $0.36, while Operating EPS was $0.64, up 0.3 percent, or 5.5 percent on a constant currency basis.

 

• Net revenues declined 5.% to $8.3 billion; Organic Net Revenues increased .5% 

• Operating income increased 2.2%, up 7.5% on a constant currency basis 

• Diluted EPS declined 2.6% to $0.37, up 2.6% on a constant currency basis 

• Company reaffirmed 203 guidance of Organic Net Revenue growth at the low end of 5%-7% range, and Operating EPS of $.50 to $.55 based on average August 202 foreign currency rates

 

"As we expected, our top-line growth this quarter was modest," said Irene Rosenfeld, Chairman and CEO. "This reflected the lapping of our exceptional performance in the third quarter last year and a lower contribution from pricing.  We also had some short-term executional missteps in a few key countries, but these issues should be largely resolved by the end of the year.  Growth in our core categories continues to be robust.  And we remain confident in our ability to deliver our 203 and long-term targets." 

 

Net revenues were $8.3 billion, down 5. percent, including a 6.6 percentage point headwind from currency.  Organic Net Revenues increased .5 percent despite lapping 9.4 percent growth in the prior year third quarter.  The increase was driven by 6 percent growth from global and regional Power Brands.  Favorable pricing of 2.2 percentage points was partially offset by 0.7 percentage points from lower volume/mix.  Through the first nine months of 202, Organic Net Revenues increased 4.6 percent.

Operating income was $. billion, up 2.2 percent, or 7.5 percent on a constant currency basis, as the effective management of input costs and lower SG&A more than offset the impact of lower volume/mix.   Operating income margin rose 0.9 percentage points to 3. percent.  Year-to-date, operating income grew 4.8 percent, or 9.3 percent on a constant currency basis, while operating income margin increased 0.9 percentage points to 2.7 percent. 

 

Diluted EPS was $0.37, down 2.6 percent, including a $0.02 negative impact from currency.  On a constant currency basis, diluted EPS increased 2.6 percent in the third quarter and 7.8 percent year to date.  The increase was driven primarily by operating gains, mostly offset by an increase in taxes due to significant one-time benefits in the prior year.      

 

Developing Markets delivered modest organic revenue growth reflecting a difficult comparison to the prior year quarter as well as some executional issues in a few key markets.  

Net revenues in the third quarter decreased 6.0 percent, including a negative 7.7 percentage point impact from currency.  Organic Net Revenues6 grew .7 percent, with higher pricing partially offset by lower volume/mix.  The modest rise in Organic Net Revenue reflected difficult comparisons to the 5.5 percent growth generated in the prior year quarter, when many customers increased purchases ahead of announced price increases.  The region's Power Brands grew about 7 percent, led by Cadbury Dairy Milk, Lacta and Milka chocolate, and Oreo and Barni biscuits.

 

Revenue growth reflected mixed performance across the region.  Key markets such as China, India and the Middle East & Africa grew strongly, but this was tempered by weak results in Brazil and Russia due to short-term executional issues.  The company has taken actions to address these issues, and expects fourth quarter 202 Organic Net Revenue in the region to grow high single digits.    

Segment operating income decreased 6.3 percent, including a negative 5.3 percentage point impact from currency.  Excluding currency, segment operating income was essentially flat as lower volume/mix largely offset the effective management of input costs.