Mondelez International to Launch Milka This September to Arrest Falling Sales Outside of the US
28 Jul 2016 --- Mondelez International is to launch flagship chocolate brand Milka in China in September, as it hopes to arrest falling sales outside the US which contributed to a near 18 percent plummet in sales in the second quarter.
Mondelez International, which had a bid for Hershey recently rejected in June this year, reported that revenues fell 17.7 percent to $6.3billion in the quarter ending June 30, although that was better than some analysts expected.
Profits, however, were up over 14 percent to $464m in the period.
Sales fell in all markets outside its domestic market of the US.
In its biggest market of Europe, sales were down 26.5 percent to $2.1bn; in Latin America, they were down 32 percent to $843m; in Eastern Europe, Middle East & Africa, they were down 25 percent to $648m. In the US, sales nudged up 0.4 percent to $1.7bn in Q2.
Revenues, which have fallen each quarter over the past two years, were negatively impacted by "currency headwinds" and an accounting change it made to its struggling business in Venezuela.
Mondelez International, like its competitors, is trying to stay ahead of changing consumer trends, such as a long-standing shift to consumers wanting healthier options.
The Oreo and Cadbury maker said it would launch Milka, one of its Power Brands, in September this year in China, a $2.8bn market where Hershey has a presence.
Mondelez International offered no update in the results as to whether it would make a fresh bid for Hershey. A marriage between the two would create the world’s biggest chocolate maker.
"Despite a challenging macro environment, our strong execution and first-half performance give us confidence in delivering our 2016 outlook and 2018 margin targets," said Irene Rosenfeld, Chairman and CEO.
"While our reported margin results reflect the negative impact from the loss of revenue from our coffee joint venture and Venezuela deconsolidation, we continue to drive strong margin expansion on an adjusted basis.
“Our ongoing focus on operational efficiency enables us to invest for sustainable, profitable growth in our Power Brands, white-space expansion and sales capabilities. This is evidenced by our upcoming launch of Milka chocolate in China, a $2.8 billion market with significant growth potential, and our substantial investment in e-commerce."
Shares in Mondelez fell around one percent to $44.72 after the announcement of the results.
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