Mondelez International ((MDLZ)) has held its Q4 earnings call. Read on for the main highlights of the call.
Maximize Your Portfolio with Data Driven Insights:
- Leverage the power of TipRanks' Smart Score, a data-driven tool to help you uncover top performing stocks and make informed investment decisions.
- Monitor your stock picks and compare them to top Wall Street Analysts' recommendations with Your Smart Portfolio
The recent earnings call for Mondelez International painted a picture of a company that has enjoyed a fruitful financial year in 2024, marked by substantial revenue growth and notable achievements in brand performance and sustainability. Nonetheless, the company is grappling with challenges stemming from cocoa cost inflation, which is anticipated to impact profitability in 2025. Despite these hurdles, Mondelez remains optimistic about its long-term growth prospects, buoyed by strong brand loyalty and strategic initiatives.
Strong Financial Performance in 2024
Mondelez International reported a robust financial performance for 2024, achieving an organic net revenue growth of 4.3%, adjusted gross profit dollar growth of 5.1%, and an impressive adjusted EPS growth of 13%. The company also generated $3.5 billion in free cash flow and returned $4.7 billion to its shareholders, demonstrating its commitment to maximizing shareholder value.
Robust Brand Performance
The company’s iconic brands, including Oreo and Cadbury Dairy Milk, spearheaded successful marketing campaigns and sustained strong consumer loyalty, contributing significantly to the company’s overall performance. Mondelez also witnessed double-digit growth in its e-commerce business, with its next tier markets expanding by approximately 35% in 2024.
Sustainability Progress
In the realm of sustainability, Mondelez made significant strides by sourcing 90% of its cocoa through the Cocoa Life program. The company also reduced its carbon emissions by about 38% from 2018 levels, and ensured that 96% of its packaging is recyclable, reinforcing its commitment to sustainable practices.
Positive Market Share Developments
Mondelez held or gained market share in 50% of its revenue base, with brands like Cadbury Dairy Milk and Milka achieving remarkable growth. These market share improvements underscore the company’s strong competitive position in the industry.
Cocoa Cost Inflation
The company faced significant challenges due to an unprecedented rise in cocoa costs, which impacted its financial performance. This inflation is expected to result in a projected decline in adjusted EPS by approximately 10% for 2025.
Challenges in North America
Mondelez’s North America business encountered softer category performance, with limited pricing possibilities due to evolving consumer behavior and heightened promotional intensity, adding to the challenges faced by the company.
Profitability Impact in Q4
The fourth quarter saw Mondelez’s profitability notably affected by increased cocoa costs, leading to a decline in operating income across several regions. This highlights the ongoing challenges posed by rising input costs.
Forward-Looking Guidance
Mondelez International remains steadfast in its growth strategy, projecting approximately 5% top-line growth in 2025 despite the anticipated 10% decline in adjusted EPS due to cocoa cost pressures. The company aims to mitigate these challenges through strong revenue growth management, cost discipline, and strategic investments in its brands, capabilities, and distribution channels. Furthermore, Mondelez is optimistic about continued improvements in its chocolate and biscuit categories, supported by reinvestments in innovation and digital snacking.
In conclusion, Mondelez International’s earnings call reflects a year of strong financial performance and strategic advancements, albeit with some challenges on the horizon. The company’s commitment to sustainability, brand strength, and strategic growth initiatives positions it well for future success, even as it navigates the complexities of rising cocoa costs.
