Q4 2024 Earnings Summary
- Mondelez expects an adjusted EPS decline of approximately 10% in 2025 due to unprecedented cocoa cost inflation, signaling significant profitability pressure.
- Elevated cocoa prices are forcing Mondelez to implement multiple pricing actions in 2025, which may lead to higher price elasticity and potential volume declines in their key chocolate category. The company anticipates elasticities of around 0.4 to 0.5, higher than in 2024.
- The ability to grow EPS in 2026 is contingent on cocoa prices stabilizing or additional price increases, which could further impact volumes and market share if consumers resist higher prices. Management stated that achieving EPS growth in 2026 depends on cocoa price levels and successful pricing actions.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +3% | Higher net pricing and strong snack demand drove revenue growth, while divestitures and currency headwinds partially offset gains. Continued emphasis on portfolio expansion and strategic acquisitions in prior periods contributed to the current performance. |
Chocolate | +7% | Strong brand performance (e.g., Cadbury Dairy Milk, Milka) and favorable volume/mix propelled chocolate sales, despite input cost inflation. Ongoing product innovations and regional marketing drives helped sustain growth from earlier quarters. |
Beverages | -92% | The sharp decline reflects a strategic shift away from certain beverage categories and the lapping of prior-year beverage licensing deals that boosted volumes. Reallocation of resources into core snack segments has diminished beverage revenues significantly. |
Latin America | -7% | Currency devaluation (particularly in Argentina) and volume softness in Mexico weighed on results, overriding positive net pricing. The region previously experienced strong acquisition contributions but now faces consumer affordability challenges and cost pressures. |
AMEA | +10% | Pricing actions and favorable mix in biscuits and gum supported growth, partially offset by currency translation in markets like Nigeria and Egypt. The region continues to benefit from product localization and expanding distribution, carrying forward momentum from earlier quarters. |
Europe | +6% | Improved consumer sentiment, stable elasticities, and robust brand execution (e.g., Cadbury, Milka) spurred recovery after prior-year disruptions. The completion of pricing negotiations and supply chain improvements also helped bolster sales. |
SG&A | +53% | Increased marketing and advertising outlays, acquisition integration costs, and investments in digital capabilities drove SG&A higher. The ERP Systems Implementation and platform upgrades initiated in prior quarters further elevated overhead spend. |
Operating Income | +35% | Pricing power and productivity gains offset input cost inflation, while favorable mark-to-market in earlier periods contributed to the YoY lift. Overhead efficiencies from the Simplify to Grow program and portfolio reshaping also helped expand margins. |
Net Income | +1,737% | This extraordinary jump stems from lapping large prior-year charges (e.g., intangible asset impairments, inventory step-ups), coupled with favorable hedging impacts. Even though currency volatility and acquisition costs remain, the baseline for comparison was substantially lower last year. |
Diluted EPS | +86% | Boosted by strong operational performance, lower share count, and reduced financing costs, despite pockets of inflationary pressure. The contrast to the prior year’s lower EPS base also amplifies percentage growth, reflecting the continued benefit of pricing strategies and cost discipline. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Growth | FY 2025 | no prior guidance | 5% | no prior guidance |
Adjusted EPS | FY 2025 | no prior guidance | decline of ~10% from $3.36 base | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | $3B+ | no prior guidance |
Inflation | FY 2025 | no prior guidance | double-digit increase | no prior guidance |
Interest Expense | FY 2025 | no prior guidance | $350M | no prior guidance |
Adjusted ETR | FY 2025 | no prior guidance | mid-20s | no prior guidance |
Share Repurchase | FY 2025 | no prior guidance | at least $3B | no prior guidance |
ForEx Impact | FY 2025 | no prior guidance | $0.12 EPS headwind | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue Growth (Organic, YoY) | Q4 2024 | High end of 3% to 5% for FY 2024 | Increased by ~3.1% YoY (from 9,314In Q4 2023 to 9,604In Q4 2024) | Met |
Earnings Per Share (EPS, YoY) | Q4 2024 | Expected to decline ~20% YoY | Increased by ~87% YoY (from 0.70In Q4 2023 to 1.31In Q4 2024) | Beat |
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Cocoa Prices and EPS Outlook
Q: How do elevated cocoa prices impact your EPS outlook for 2025 and 2026?
A: Elevated cocoa prices present a headwind, but we're committed to delivering EPS growth in 2026 regardless. We're implementing pricing actions and cost measures to offset profit pressures. If cocoa prices stay high, we'll price more; if they come down, we'll benefit from earnings upside. We prefer planning conservatively without assuming cocoa prices will drop. -
Chocolate Strategy Amid High Cocoa Prices
Q: How are high cocoa prices affecting your chocolate strategy, especially in Europe?
A: Despite high cocoa prices, chocolate remains a strong category with low elasticities around 0.4%. We're protecting category health, share, and brand investment. We're implementing strong revenue growth management and pricing actions, with significant line pricing underway. Our European business is solid, with 8% value growth in chocolate over the last 3 months and double-digit growth during Christmas. -
North America Biscuit Outlook
Q: What's your view on the U.S. biscuit category and expectations for 2025?
A: The U.S. biscuit category is softer, with category growth of 0.6% recently, but we expect a solid P&L in 2025. We'll drive volume growth through lower price points, price pack architecture, and strong activations, despite limited pricing possibilities. While percentage gross profit may decline, we anticipate strong dollar generation. -
Supply Chain Productivity Initiatives
Q: Can you elaborate on your supply chain productivity program for 2025?
A: We're targeting about 4% gross productivity in our supply chain, aiming to achieve this in 2025 after challenges in recent years. This significant productivity program will help offset profit pressures from high cocoa prices. -
Timing of Pricing Decisions
Q: When will you decide on additional pricing in response to cocoa price changes?
A: For 2025, we've planned multiple pricing waves based on current cocoa levels. We'll monitor the market, especially around September and October, and adjust our actions for the second half of the year and for 2026 as needed. -
Earnings and COGS Inflation Cadence
Q: How will earnings and COGS inflation progress throughout 2025?
A: Elevated cocoa costs will impact us equally throughout 2025, but increased pricing will improve profitability sequentially, especially from Q2 onwards. Inflation will continue affecting us in Q1 to Q3, with Q4 being different due to already elevated cocoa in the baseline. -
Elasticity Assumptions
Q: What elasticity assumptions are in your guidance?
A: We're assuming an average elasticity of 0.4 to 0.5x for 2025, slightly higher than in 2024. We monitor elasticities closely; so far, they've been lower than this assumption. -
Impact of Health Trends on Snacking
Q: Are health trends or GLP-1 drugs affecting snacking consumption?
A: We do not see snacking diminishing due to health trends or GLP-1 drugs. Indulgent snacking remains strong, and we haven't observed significant shifts in consumer behavior. -
Path Back to EPS High Watermark
Q: What's the path back to previous EPS levels given current cocoa prices?
A: Returning to previous EPS levels depends on cocoa prices and our pricing levels in 2026. We're committed to EPS growth in 2026, either through pricing more if cocoa stays high or benefiting from earnings upside if cocoa prices decrease.