Mondelez International, Inc. reported 2013 results, in line with recent expectations. For the full year net revenues were $35.3 billion, up 0.8 percent. Operating income increased 9.2 percent to $4.0 billion, while operating income margin was 11.2 percent. Diluted earnings per share (EPS) were $2.19, including $0.90 from discontinued operations reflecting the net gain from the resolution of the Starbucks arbitration.
Organic net revenues increased 3.9 percent, driven by strong volume/mix of 3.4 percentage points as well as favorable pricing of 0.5 percentage points. Lower coffee revenues, reflecting the pass-through of lower green coffee costs, tempered growth by 0.8 percentage points. Market share performance was strong with nearly 70 percent of revenues gaining or holding share.
Revenues from emerging markets were up 8.8 percent, led by a nearly 10 percent gain in the BRIC markets. Developed markets increased 0.8 percent as growth in North America and Europe was partially offset by a mid-single digit decline in Asia Pacific.
Power Brands grew 6.5 percent. Oreo, Tuc, Club Social, belVita and Barni biscuits, Cadbury Dairy Milk and Lacta chocolate and Tassimo coffee each posted double-digit increases.
Adjusted operating income increased 4.7 percent on a constant currency basis. Volume/mix-driven gross profit growth was partially offset by increased investments in sales capabilities and route-to-market expansion as well as the net impact of one-time items. Adjusted operating income margin was 12.0 percent, down 0.2 percentage points, including a negative impact of 0.3 percentage points due to the devaluation of the Venezuelan bolivar.
Adjusted EPS was $1.51, including a negative $0.09 impact from currency. On a constant currency basis, Adjusted EPS increased 13.5 percent, largely reflecting a positive impact of $0.07 from lower taxes and $0.04 from operating gains.
Free Cash Flow excluding items was $2.3 billion driven by earnings growth and working capital improvement.
"In our first full year as a global snacking company, we delivered solid revenue growth and strong market share performance in the face of a significant slowdown in our categories as 2013 progressed," said Irene Rosenfeld, chairman and CEO, in a prepared statement. "At the same time, we accelerated investments in emerging markets, strengthened our balance sheet and returned $3.6 billion of cash to our shareholders. Nevertheless, we're disappointed that our results were below what we and our shareholders originally expected.
"We're committed to improving results in 2014 and beyond. Specifically, we expect to grow organic revenue at or above our category growth rate, which we estimate at approximately 4 percent in 2014. In addition, we remain focused on increasing efficiency and aggressively reducing costs in both our supply chain and overheads to deliver strong margin gains throughout the year. Although we anticipate near-term economic conditions will remain challenging, the plans we are executing give us great confidence in our potential to significantly expand margins and deliver strong top-line growth in 2014 and the years ahead."
Fourth Quarter Results
Net revenues were $9.5 billion, down 0.1 percent. Operating income increased 5.3 percent to $1.0 billion, while operating income margin was 10.6 percent. Diluted EPS was $1.00 including $0.91 from discontinued operations reflecting the net gain from the resolution of the Starbucks arbitration.
Organic net revenues increased 2.5 percent, nearly all due to volume/mix. The pass-through of lower coffee commodity costs tempered growth by 0.7 percentage points. Revenues from emerging markets increased 5.9 percent, led by low-teens growth in India and mid-to-high single digit growth in Russia and Brazil. China declined double digits due to weak biscuit performance. Developed markets were up 0.5 percent as growth in North America and Europe was mostly offset by a decline in Asia Pacific.
Power Brands continued to grow faster than the company average, up 4.1 percent, led by Tuc, Club Social, belVita and Barni biscuits, Cadbury Dairy Milk, Milka and Lacta chocolate and Tassimo coffee.
Adjusted operating income increased 31.5 percent on a constant currency basis, reflecting overhead reductions, particularly in North America, Europe and corporate functions. Other positive factors included the net impact of one-time items and volume/mix-driven gross profit gains. Adjusted operating income margin was 13.9 percent, a sequential improvement from the previous quarter, and up 2.9 percentage points versus prior year.
Adjusted EPS was $0.42, including a negative $0.02 impact from currency. On a constant currency basis, Adjusted EPS increased 15.8 percent, mostly reflecting a $0.08 gain from operations. Other positive impacts from gains on sales of property, shares outstanding and interest expense were offset by higher taxes. Full report.
