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    Mondelez International Inc (MDLZ)

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    Mondelez International, Inc. is a global leader in the snack food industry, operating in over 150 countries. The company specializes in the production and sale of chocolate, biscuits, and baked snacks, with additional ventures in gum & candy, cheese & grocery, and powdered beverages . Mondelez's product categories are organized into five main segments, with a strategic focus on generating the majority of its revenue from its core snacking categories .

    1. Biscuits & Baked Snacks - Produces a wide range of biscuits and baked snack products, contributing significantly to the company's revenue.
    2. Chocolate - Offers a variety of chocolate products, playing a crucial role in the company's core business strategy.
    3. Gum & Candy - Engages in the production and sale of gum and candy products, complementing its core snack offerings.
    4. Beverages - Involves the production and distribution of powdered beverages, expanding the company's product portfolio.
    5. Cheese & Grocery - Includes cheese and grocery items, providing additional variety to the company's product lineup.
    Initial Price$70.15April 1, 2024
    Final Price$65.24July 1, 2024
    Price Change$-4.91
    % Change-7.00%

    What went well

    • Mondelez is implementing targeted promotions and launching new smaller packs priced at $3 to $4 for brands like Oreo, Chips Ahoy!, and Ritz in North America, leading to value share improvements and expectations of positive volume growth.
    • With pricing disruptions resolved, Mondelez expects Europe to return to volume growth in the second half, driven by strong seasonal activations like back-to-school and Christmas, stable consumer confidence, and already positive growth in biscuits and baked snacks (value up 2.8%, volume up 0.8%).
    • Mondelez has line of sight to the upper end of its revenue guidance for the year, supported by strong performance in emerging markets (total revenue grew +4.5%), improving U.S. biscuit volumes, and July shaping up well, which reinforces confidence in achieving targets.

    What went wrong

    • Softness in the North American market, with volume declines in the U.S. biscuit business due to changing consumer behavior, downtrading, and competition, requiring more promotions and adjusted pricing strategies, which may impact margins.
    • The need for volume and organic sales growth to accelerate in the second half, particularly in Europe and North America, to meet guidance, indicating potential challenges in achieving top-line growth targets in a still challenging environment.
    • Rising cocoa costs expected to become a material headwind in the second half, which may negatively impact margins and earnings, as the company lapped favorable cocoa costs in the first half.

    Q&A Summary

    1. North America Consumer Outlook
      Q: Do we need more aggressive pricing in North America?
      A: The consumer situation in North America is stabilizing but remains soft. Consumers feel tension due to inflation and have changed where they shop, favoring value clubs and Walmart. We don't think a full price reset is needed but will focus on improving sales through smarter promotions, launching smaller packs at $3 to $4 price points, and driving distribution.

    2. European Volume Growth
      Q: What drives confidence in Europe's volume growth?
      A: European consumers are cautiously optimistic with rising incomes and softening inflation. While elasticities have increased slightly, they remain modest. Our biscuits and baked snacks grew 2.8% in value and 0.8% in volume in Q2. With pricing actions completed and key activations like back-to-school and Christmas, we expect a good second half in Europe.

    3. Full-Year Guidance and EPS Outlook
      Q: How can you hit revenue guidance and keep EPS unchanged?
      A: We're on track with our expectations. To reach the upper end of our 3–5% revenue growth guidance, Europe must return to volume growth, U.S. biscuits need positive volume, and comparisons will ease due to prior-year discontinuations. Despite strong year-to-date results, unchanged EPS guidance accounts for increased cocoa costs in the second half and continued investments.

    4. Cocoa Commodity Costs
      Q: How are you managing cocoa price volatility?
      A: We believe cocoa prices will correct; current spot price is £6,500 per ton, with a future gap of £2,200. We have increased physical coverage into 2025, with about 25% of positions hedged via futures. The rest is covered through derivatives allowing us to participate in potential price adjustments. We have protection for most of our positions into 2025.

    5. Free Cash Flow Guidance
      Q: Can free cash flow guidance be raised above $3 billion?
      A: Yes, excluding one-time items, our cash flow is running at $4 billion plus. With top-notch cash conversion and ongoing productivity initiatives like SAP implementation, we believe we can strive for more than $4 billion on an ongoing basis.

    6. Gross Margin Expectations
      Q: Will gross margins decline as previously expected?
      A: We anticipate gross profit dollar growth ahead of our usual algorithm. While cocoa is a material headwind in the second half, and we may invest selectively, we're cautious but optimistic about our profitability.

    7. Biscoff Partnership
      Q: What's the potential of the Biscoff partnership?
      A: We'll co-brand chocolate products with Biscoff, a popular European biscuit brand. Our similar OREO line generates several hundred million in sales in Europe, and we have similar expectations for Biscoff. If successful, we'll extend globally. Additionally, we'll manufacture and sell Biscoff in India starting in the second half of 2025.

    8. Mexico Market Conditions
      Q: What's impacting performance in Mexico?
      A: Market conditions are healthy with mid-single-digit growth in biscuits and chocolate. A temporary reduction in public subsidies due to elections affected candy and chocolate sales, but we expect normalization in the second half. Integration with Ricolino is going well, boosting our market presence.

    9. India Distribution Expansion
      Q: Are you expanding distribution in India despite challenges?
      A: Yes, despite flat growth in Q2, we're expanding distribution aggressively. We've added 140,000 stores and 90,000 visi-coolers in H1 '24. We cover over 3 million outlets, with significant headroom in a market of 9 million food retail outlets.

    10. ERP Transition Impact
      Q: Will the ERP transition affect operations in 2025?
      A: The ERP rollout will be completed over a four-year timeframe using a staggered approach. We're carefully managing resources and modules to minimize potential issues, so we don't expect significant operational impact in 2025.

    NamePositionStart DateShort Bio
    Dirk Van de PutChairman and Chief Executive OfficerNovember 2017Dirk Van de Put is the Chairman and Chief Executive Officer of Mondelēz International. He became CEO in November 2017 and Chairman in April 2018. Previously, he was President and CEO of McCain Foods Limited and held leadership roles at Novartis AG, Groupe Danone SA, The Coca-Cola Company, and Mars, Incorporated .
    Luca ZaramellaExecutive Vice President and Chief Financial OfficerAugust 2018Luca Zaramella is the Executive Vice President and Chief Financial Officer at Mondelēz International. He assumed this role in August 2018. He joined Mondelēz in 1996 and has held various finance roles, including Senior Vice President Corporate Finance and CFO Commercial .
    Vinzenz P. GruberExecutive Vice President and President, EuropeJanuary 2019Vinzenz P. Gruber became the Executive Vice President and President, Europe in January 2019. He has been with Mondelēz since 1989, with a break from 2000 to 2007, and has held roles such as President, Western Europe and President, Chocolate, Europe .
    Deepak D. IyerExecutive Vice President and President, Asia Pacific, Middle East and AfricaJune 2023Deepak D. Iyer became the Executive Vice President and President, Asia Pacific, Middle East and Africa in June 2023. He joined Mondelēz in 2016 and previously served as President India. He has held leadership positions at PepsiCo, Wrigley India, and Bharti AXA General Insurance .
    Stephanie LilakExecutive Vice President and Chief People OfficerJanuary 2024Stephanie Lilak became the Executive Vice President and Chief People Officer in January 2024. She was previously the Chief People Officer at Bumble Inc. and held senior HR roles at Dunkin’ Brands Group and General Mills .
    Mariano C. LozanoExecutive Vice President and President, Latin AmericaMay 2022Mariano C. Lozano became Executive Vice President and President, Latin America in May 2022. Before Mondelēz, he was CEO of Danone North America and held various leadership roles at Danone across Latin America .
    Daniel E. RamosExecutive Vice President and Chief Research and Development OfficerNovember 2022Daniel E. Ramos became the Executive Vice President and Chief Research and Development Officer in November 2022. He was previously Senior Vice President of Global Packaging at The Estée Lauder Companies and Chief Scientific Officer at Coty Inc. .
    Laura SteinExecutive Vice President, Corporate & Legal Affairs, General Counsel and Corporate SecretarySeptember 2023Laura Stein became Executive Vice President, Corporate & Legal Affairs, General Counsel and Corporate Secretary in September 2023. She joined Mondelēz in 2021 and previously worked at The Clorox Company in various leadership roles .
    Gustavo C. ValleExecutive Vice President and President, North AmericaMarch 2022Gustavo C. Valle became Executive Vice President and President, North America in March 2022. He was previously Executive Vice President and President, Latin America, and has held leadership roles at Groupe Danone SA .
    Volker KuhnExecutive Vice President and President, EuropeApril 1, 2025Volker Kuhn will serve as the Executive Vice President and President, Europe effective April 1, 2025. He will join Mondelēz on January 6, 2025. Kuhn comes from Reckitt's hygiene business and has extensive experience from Procter & Gamble .
    Vinzenz P. GruberExecutive Vice President and President, Europe (retiring)Retiring April 1, 2025Vinzenz P. Gruber has served as the Executive Vice President and President, Europe since January 2019. He announced his retirement effective April 1, 2025. He has been with Mondelēz since 1989, with a break from 2000 to 2007, and has held roles such as President, Western Europe and President, Chocolate, Europe .
    1. Given that volume declines in North America have moderated but still need to improve, and considering the ongoing softness in the U.S. biscuit business, how confident are you in achieving the expected volume growth in the second half and reaching the upper end of your revenue guidance? ,

    2. With cocoa prices being a material headwind in the second half and your expectation of higher costs related to cocoa, how are you planning to manage margins in your chocolate business, and are you considering further price increases that might impact volume and market share? ,

    3. In North America, consumers are seeking products at lower absolute price points, impacting brands like Chips Ahoy!, and you are introducing new packs in the $3 to $4 range; how will this strategy affect your profitability, and what risks do you see in balancing value offerings with margin protection? ,

    4. Despite strong earnings growth and cash flow running at $4 billion plus, your long-term free cash flow guidance remains at $3 billion; what are the key factors preventing you from raising this guidance, and how should investors think about your capital allocation priorities? ,

    5. With the ERP transition and SAP implementation planned over the next four years, what risks does this pose to your business operations and financial performance, particularly in 2025, and how are you mitigating potential disruptions associated with such a significant system change? ,

    Program DetailsProgram 1
    Approval DateJanuary 1, 2023
    End Date/DurationDecember 31, 2025
    Total additional amount$6.0 billion
    Remaining authorization$3.2 billion as of September 30, 2024
    DetailsThe program allows for discretionary repurchases determined by management.

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Organic Net Revenue Growth: Expected at the upper end of the 3% to 5% range .
      2. Earnings Per Share (EPS): Holding the EPS goal despite cocoa headwinds .
      3. Free Cash Flow: $3.5 billion .
      4. Interest Expenses: Estimated at EUR 275 million .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Organic Net Revenue Growth: Upper end of the 3% to 5% range .
      2. Interest Expense: Approximately $300 million .
      3. EPS Headwinds: $0.10 related to foreign exchange impact .
      4. Adjusted Effective Tax Rate: Mid-20s .
      5. Share Repurchase: $2 billion .
      6. Inflation: High single-digit .
      7. Cocoa Costs: Expected to escalate .
      8. Volume: Expected to be flattish .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Organic Net Revenue Growth: Upper end of the 3% to 5% range .
      2. Adjusted EPS Growth: High single-digit growth from $3.30 per share .
      3. Free Cash Flow: $3.5 billion plus .
      4. Inflation: High single-digit increase .
      5. Interest Expenses: Approximately $325 million .
      6. Effective Tax Rate (ETR): Mid-20s percentage range .
      7. Share Repurchases: Around $2 billion .
      8. Foreign Exchange Impact: $0.03 headwind on EPS .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the Q3 2024 earnings call for Mondelez International (MDLZ). Therefore, I cannot provide the guidance metrics from that specific earnings call.

    Competitors mentioned in the company's latest 10K filing.

    • Campbell Soup Company
    • The Coca-Cola Company
    • Colgate-Palmolive Company
    • Danone S.A.
    • General Mills, Inc.
    • The Hershey Company
    • Kellanova (formerly Kellogg Company)
    • The Kraft Heinz Company
    • Nestlé S.A.
    • PepsiCo, Inc.
    • The Procter & Gamble Company
    • Unilever PLC

    Recent developments and announcements about MDLZ.

    Corporate Leadership

      Leadership Change

      ·
      Dec 3, 2024, 2:46 PM

      Vinzenz Gruber is retiring as Executive Vice President and President, Europe, at Mondelēz International, effective April 1, 2025. Volker Kuhn will step up to replace him, joining the company on January 6, 2025, to ensure a smooth transition. Kuhn brings extensive experience from Reckitt and Procter & Gamble, where he led significant growth and transformation initiatives .