Mondelez International, Inc. (MDLZ) Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered modest top-line growth with material gross margin and EBIT compression from record cocoa cost inflation; net revenues rose to $9.74B (+5.9% YoY) while GAAP EPS fell to $0.57 and Adjusted EPS to $0.73 .
• Versus Wall Street, MDLZ posted an EPS beat (+3% vs consensus $0.709*) and a slight revenue beat (+0.7% vs $9.67B*), but a notable EBITDA miss (~-13% vs $1.61B*), reflecting input cost pressure and unfavorable mix .
• Management lowered full-year guidance: Organic Net Revenue growth to “4%+” (from ~5%) and Adjusted EPS decline to ~15% (from ~10%) on constant FX; FCF outlook maintained at $3B+, with currency now a ~0.5% tailwind to revenue and +$0.05 to Adjusted EPS .
• Key call themes: European chocolate price elasticities higher than planned (0.7–0.8), U.S. biscuits category softness and retailer destocking, and increased 2026 growth investments (working media and supply-chain program); a Q4 top-line step-up is implied with Christmas activation and pricing benefits .

What Went Well and What Went Wrong

What Went Well

• Regional growth breadth despite cocoa: Europe (+10.6% reported), AMEA (+9.0%), and Emerging Markets (+9.9%) led revenue, with pricing driving organic growth (+8.0 pp pricing vs -4.6 pp volume/mix) .
• Management execution on pricing and activation: “We delivered solid top-line growth despite the impact of record-high cocoa cost inflation, with the third quarter representing peak costs of the year” (CEO) .
• Seasonal momentum and cost actions: CFO expects better Q4 top-line led by Europe’s Christmas activation; productivity and cost efficiencies also in place to mitigate pressure .

What Went Wrong

• Margins compressed sharply: GAAP gross margin fell 580 bps (26.8% vs 32.6% PY) and GAAP operating margin fell 490 bps (7.6% vs 12.5% PY) on input cost inflation and mix; Adjusted OI margin declined 690 bps to 12.0% .
• U.S. category softness and elasticity in Europe: CFO flagged U.S. biscuit volume decline (~-4%) and European chocolate elasticities of 0.7–0.8 vs prior 0.4–0.5 assumptions, weighing volumes and share in pockets (UK, Germany) .
• Guidance cut: FY Organic Net Revenue down to 4%+ and Adjusted EPS decline widened to ~15% constant FX, reflecting weaker U.S. demand and higher elasticities in Europe .

Financial Results

Quarterly Progression and Sequential/YoY Comparisons

Actuals vs S&P Global Consensus (Q3 2025)

Values retrieved from S&P Global.*

Segment Breakdown (Reported Revenue and Margin)

KPIs and Drivers

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We delivered solid top-line growth despite the impact of record-high cocoa cost inflation, with the third quarter representing peak costs of the year… We remain confident… which position us well for next year and beyond.” .
• CFO on FY guide change and Q4: “With incremental softening of the U.S. biscuit market… and higher chocolate elasticities in Europe… the implied Q4 shows a step up in the top line… and over-delivery of EBIT vs last year.” .
• CEO on Europe elasticity and price points: “Overall… elasticity is around 0.7, 0.8… We passed two key price points on our 300-gram range in chocolate… we need to bring it back to the right price point.” .
• CFO on 2026: “Cocoa will be deflationary in 2026… our goal is high single-digit EPS growth… even after material investments.” .
• CFO on North America supply chain program: “Address mostly cost… automation… DSD logistics simplification… meaningful impact starting most likely as of 2027.” .

Q&A Highlights

• Europe elasticities higher than modeled (0.7–0.8), with targeted price resets and seasonal activation to improve volumes; seasonal products carry lower elasticity .
• U.S. strategy emphasizes channel expansion (club, dollar/value, e-commerce, C-stores), multipacks, and protecting key price points (~$3–$4) to balance value and profitability .
• FY 2025 outlook implies Q4 top-line step-up driven by Europe seasonality and pricing; U.S. volume remains pressured but pricing aids top/bottom line .
• 2026 spending to step up in working media; non-working media controlled; overhead actions and SG&A savings to level 2025 baseline (incentives normalized) .
• GLP-1 impact remains immaterial; category weakness mainly economic; protein bar brands (Perfect Bar, Builder’s) growing 20%+ .

Estimates Context

• EPS: Actual $0.73 vs consensus $0.709* — bold beat on EPS despite margin pressure, aided by lower taxes and fewer shares .
• Revenue: Actual $9.744B vs consensus $9.673B* — slight beat on pricing-led growth .
• EBITDA: Actual $1.399B* vs consensus $1.611B* — miss underscores cost inflation and mix headwinds.
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Pricing resilience continues to support revenue, but elevated elasticities (Europe) and U.S. category softness cap volume; margin recovery likely depends on cocoa normalization and mix improvement .
• Guidance reset reduces 2025 expectations; however, 2026 setup improves with deflationary cocoa view and reinvestment (working media, supply-chain automation), targeting high single-digit EPS growth .
• Near term (Q4) catalyst: seasonal activation and incremental pricing should lift Europe’s volumes; monitor U.S. scanner trends, multipack growth, and channel share gains .
• Watch margins: Adjusted OI margin down to 12.0% in Q3; EBITDA miss vs consensus highlights cost pressure — cocoa moderation plus productivity and reduced A&C/non-working media should help stabilize .
• Balance sheet/cash returns remain supportive (YTD FCF $1.24B, $3.7B capital returned 9M); Net Debt at ~$20B — prudent buybacks likely tactical around valuation and outlook .
• Strategic product angles: premium (Tate’s), health (protein bars), co-branded innovations (Cadbury Biscoff) to drive mix and share in 2026 amid reinvestment .
• Risk checks: elasticity persistence, U.S. consumer sentiment, tariff/currency volatility; actions embedded in outlook and hedging strategy .