Mondelēz International reports Q3 2022 results

Mondelēz International Inc. reported its third-quarter 2022 results.

Third-quarter highlights

• Net revenues increased +8.1% driven by organic net revenue growth of +12.1% with underlying volume/mix of +0.7%.
• Diluted EPS was $0.39, down 56.2%; adjusted EPS was $0.74, up +15.7% on a constant currency basis.
• Raising both organic net revenue growth outlook to 10%+ and adjusted EPS growth outlook to 10%+.
• Closed Clif Bar acquisition, helping to create an annual $1+ billion global snack bar business.
• Closed Ricolino acquisition, doubling the size of its Mexico business.
• Announced incremental investment into Cocoa Life program to reach a total of $1.0 billion and expand goal to source all of its cocoa volume from Cocoa Life by 2030.

"Our third quarter performance demonstrates the resilience of our snacking categories, strength of our brands, broad-based net revenue growth of both our emerging and developed markets, effective execution of pricing, and solid volume growth, enabling us to raise our full-year revenue and earnings outlook,” Dirk Van de Put, chairman and chief executive officer, said in the announcement. “Despite ongoing macro volatility, we remain focused on executing against our strategy and delivering on items we can control, including supporting our brands and retaining healthy volumes, while continuing to deliver strong profit dollar growth and long-term share gains.”

Net revenues increased 8.1% driven by organic net revenue growth of 12.1%, and incremental sales from the company's acquisitions of Clif Bar and Chipita, partially offset by unfavorable currency. Pricing and volume drove organic net revenue growth.

Gross profit decreased $211 million, and gross profit margin decreased 560 basis points to 33.7% primarily driven by unfavorable year-over-year change in mark-to-market impacts from derivatives and a decrease in adjusted gross profit margin. Adjusted gross profit increased $351 million at constant currency, while adjusted gross profit margin decreased 100 basis points to 37.4% due to higher raw material and transportation costs and unfavorable mix, partially offset by pricing.

Operating income decreased $615 million and operating income margin was 8.7%, down 930 basis points primarily due to unfavorable year-over-year change in mark-to-market impacts from derivatives, lower adjusted operating income margin and higher acquisition-related costs, partially offset by lower restructuring costs. Adjusted operating income increased $118 million at constant currency while adjusted operating income margin decreased 110 basis points to 16.1%, with input cost inflation and unfavorable mix, partially offset by pricing and SG&A leverage.  

Diluted EPS was $0.39, down 56.2%, primarily due to acquisition-related costs incurred in the quarter, an unfavorable year-over-year change in mark-to-market impacts from derivatives, lapping a prior-year net gain on equity method transactions, higher acquisition integration costs and contingent consideration adjustments, intangible asset impairment charges incurred in the quarter and inventory step-up charges, partially offset by lower restructuring costs and an increase in adjusted EPS.  

Adjusted EPS was $0.74, up 15.7% on a constant currency basis driven by strong operating gains, lower taxes, fewer shares outstanding and higher income from equity method investments, partially offset by higher interest expense.  

Capital Return: The company returned $0.8 billion to shareholders in cash dividends and share repurchases.

Leadership announcements

The company announced three new members of its senior management team:

Frank Cervi has been named chief supply chain operations officer. A proven leader with more than 30 years of global supply chain experience, Cervi most recently served as the company’s head of supply chain strategy.

Daniel Ramos has been named chief research & development officer, effective November 8. Ramos is a seasoned global executive with more than 25 years of R&D and consumer-centric innovation expertise. He joins Mondelēz International from The Estée Lauder Companies, where he had a strong focus on advancing sustainable packaging initiatives.

Javier Polit, the company’s chief digital & information officer, is now serving on the Mondelēz International leadership team – providing enhanced strategic oversight as the company advances its commitment to becoming the digital snacks leader.

2022 outlook

For 2022, the company is updating its 2022 fiscal outlook and now expects 10+ percent organic net revenue growth versus the prior outlook of 8+%, which reflects the strength of its year-to-date performance. The company's expectation for adjusted EPS growth on a constant currency basis is now 10+% versus the prior outlook of mid-to-high single digits.

Outlook is provided in the context of greater than usual volatility as a result of COVID-19 and geopolitical uncertainty.