Mondelēz grows confectionery sales and volume across regions but Europe declines

28 Jul 2023 --- Mondelēz International has announced its Q2 results for 2023 showing strong growth across all regions and categories and raised its full-year outlook. The company reported a 17% increase in net revenues and volume growth in three of four regions, reaching US$8.51 billion in revenues this quarter.

The company now expects a 12% organic net revenue growth for its 2023 fiscal outlook, up from the previously expected 10%.

“Continuous reinvestment in our brands and capabilities, combined with ongoing price execution, cost discipline and strong volume/mix performance drove these results,” says Dirk Van de Put, chairman and CEO at Mondelēz International 

“We continue to drive robust consumer demand in our core categories across the vast majority of our businesses, and our teams continue to make significant progress against our portfolio reshaping initiatives as we remain focused on accelerating strong, sustainable growth. Our strong first-half performance and category resilience provides confidence to raise both our net revenue and earnings outlooks for the year.”

Mondelēz expects a 12% organic net revenue growth in 2023.The company’s stock is up 2.96% in pre-market trading after the financial results publication.

Increased prices
Even with increased prices, the company managed to sell more in North America (2%), Latin America (2.6%) and Asia, Middle East and Africa (3.3%). However, the company saw decreased sales (-4.5%) in Europe. 

Europe is the most important market for the company, with US$2.93 billions in revenue. Moreover, half of the global chocolate launches are in Europe, way ahead of the 20% of the Asia-Pacific market, according to Innova Market Insights. 

By value, Europe also led in confectionery and chocolate sales for last year with 38% and 44% of the global market, respectively.

Nonetheless, achieving positive volume in all regions except Europe can be seen as a success. Other food giants, such as Nestlé which also reported its financial results this week, and are struggling to sell more in volume. The Swiss company only managed to sell more volume in the Greater China Region (1.3%) and saw flat increases in the AOA zone (Asia, Oceania and Africa) with 0.1% more volume sold.

Moreover, Mondelēz is selling more at increased prices. The company increased prices by 15.8% internationally compared to Q2 2022. 

Growth was also more evenly distributed than last year, as the company managed to increase its revenue by similar percentages in emerging markets (19.7%) and developed ones (16.2%) – this compared to the 22% in emerging markets and 7% for developed ones in 2022. 

Navigating headwinds 
Similarly to Nestlé, Mondelēz is dealing with increased cocoa and sugar prices.

Floods in key cocoa production regions have led to increased raw commodity costs. Moreover, the upcoming 2024 implementation of EU deforestation regulation could also further push up prices of confectionery, which are already affected by soaring sugar prices.

Meanwhile, inflation has caught up with the sugar sector, which is dealing with similar problems to the general food industry, such as high fertilizer prices, increased supply chain costs and El Niño storms. According to the UN Food and Agriculture Organization, sugar prices are 29.7% higher than last year.Confectionery sales volume declined in Europe in Q2. (Image Credits: Mondelēz.)

Meanwhile, the company is dealing with corporate boycotts from Nordic companies over the company’s presence in Russia. Ukraine’s National Agency for the Prevention of Corruption deemed Mondelēz International a “sponsor of war” and blacklisted the snack maker together with other food companies such as Unilever.

The company highlighted in response that “there are no easy decisions.”

“Like most other global food and beverage companies, we are continuing to provide food during these challenging times, focusing our operations in Russia on affordable, shelf-stable products that are daily staples for ordinary people,” the business said in a statement. 

“If we suspended our full operations, we would risk turning over our full operations to another party who could use the full proceeds for their own interests.”

Companies reducing operations or considering leaving the country risk being expropriated by the Russian government. This month, Russian authorities seized control of Danone and Carlsberg.

Edited by Marc Cervera