US: Cost control, developing markets boost Mondelez 2012 profits

By Dean Best | 14 February 2013

  • Operating profit up in 2012
  • Power brands sales boost
  • Net earnings down on costs including from spin off 
Mondelez core brands, including Cadbury, boosted sales

Mondelez core brands, including Cadbury, boosted sales

Better management of input costs and higher sales in emerging markets have helped global snacks giant Mondelez International report higher underlying profits in 2012.

The Cadbury owner booked a 4% increase in operating income to US$3.64bn for last year.

Adjusted operating income, excluding items including forex and hedging activities, was up 7.1% at $4.88bn.

Mondelez pointed to "effective management" of input costs and "favourable volume/mix" for the improvement.

On a reported basis, net revenue was down 2.2% at $35bn. However, organic net sales were up 4.4%. Mondelez said its "power brands", which include Cadbury, Oreo biscuits and Tassimo coffee, saw an 8.1% increase in sales.

Higher interest and costs linked to the spin-off of North American grocery business Kraft Foods Group hit Mondelez's bottom line. Net earnings were down 14.1% at $3.03bn.

The company upped its forecast for operating earnings in 2013 to $1.52-1.57 a share to reflect exchange rates in 2012 and the recent devaluation of the Venezuelan bolivar.

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Mondelez International Reports Solid 2012 Results; Raises 2013 EPS Guidance


Financial Schedules and GAAP to Non-GAAP Information
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  • 2012 net revenues down 2.2% to $35.0 billion; Organic Net Revenues(1) increased 4.4%
  • 2012 Diluted EPS was $1.69; Operating EPS(1) was $1.39, up 5.1% on a constant currency basis
  • Q4 net revenues down 1.9% to $9.5 billion; Organic Net Revenues increased 3.7%
  • Q4 Diluted EPS was $0.30; Operating EPS was $0.36, down 5.1% on a constant currency basis
  • Company reaffirms 2013 Organic Net Revenue growth guidance at the low end of 5%-7% range and raises 2013 Operating EPS guidance to $1.52 - $1.57 due to currency

DEERFIELD, Ill.Feb. 13, 2013 /PRNewswire/ -- Mondelez International, Inc. (NASDAQ: MDLZ) today reported fourth quarter and full year 2012 results, reflecting solid organic revenue growth, higher gross and operating income margins, and significant investments in innovation, advertising and consumer support, and sales and distribution capabilities to drive Power Brand growth.


"This was a transformational year for our company," said Irene Rosenfeld, Chairman and CEO.  "We successfully completed the spin-off of Kraft Foods Group, resulting in a significant increase in shareholder value, and delivered solid top-line growth and higher Adjusted Operating Income margins across all geographies.  We remain relentlessly focused on driving our global snacking platforms and Power Brands while leveraging our strong routes-to-market to deliver on the exciting promise of our new growth company."

Full Year 2012 Highlights

Net revenues were $35.0 billion, down 2.2 percent.  Organic Net Revenues increased 4.4 percent, including contributions from favorable pricing of 3.3 percentage points and higher volume/mix of 1.1 percentage points.  Power Brands grew nearly double the company rate at 8.1 percent, and included double-digit increases in belVitaBarniOreo and Tuc/Club Social biscuits, Lacta andCadbury Dairy Milk chocolate, Cadbury Eclairs candy, and Tassimo and Tang beverages.

1 Please see discussion of Non-GAAP Financial Measures at the end of this press release.  

Operating income was $3.6 billion, up 4.0 percent.  Adjusted Operating Income1,2 grew 7.1 percent on a constant currency basis.   Effective management of input costs and favorable volume/mix were key drivers of the gain, partially offset by a significant increase in A&C support.  In addition, the company recognized a number of significant one-time items3 during the year, which together tempered growth by approximately 1 percentage point.  Adjusted Operating income margin was 12.2 percent, up 0.7 percentage points. 

Diluted EPS was $1.69, down 15.1 percent.  Operating EPS1 was $1.39 including a negative impact of $0.06 from currency.  On a constant currency basis, Operating EPS increased 5.1 percent, as positive impacts of $0.16 from operations and $0.09 of lower interest expense were partially offset by negative impacts from a higher tax rate of $0.16 and prior-year accounting calendar changes of $0.04.

Fourth Quarter 2012 Highlights

Net revenues were $9.5 billion, down 1.9 percent.  Organic Net Revenues1 increased 3.7 percent, including 2.1 percentage points from higher volume/mix and 1.6 percentage points of favorable pricing.  Lower coffee prices negatively impacted growth by approximately 0.6 percentage points.  Overall, Power Brand growth of 7.4 percent and a rebound in Developing Markets' performance fueled the increase in Organic Net Revenues. 

Operating income was $1.0 billion, up 16.5 percent.  On a constant currency basis, Adjusted Operating Income increased 1.1 percent, driven by effective cost management and higher volume/mix, partially offset by a significant increase in A&C support.   Additionally, the company recognized a number of significant one-time items4 during the quarter, which together moderated growth by approximately 7 percentage points.   Adjusted Operating Income margin was essentially flat at 11.0 percent. 

Diluted EPS was $0.30, down 36.2 percent.  Operating EPS was $0.36, including a negative $0.01 impact from currency.  On a constant currency basis, Operating EPS decreased 5.1 percent as negative impacts of $0.12 from a higher tax rate and $0.02 from prior-year accounting calendar changes were mostly offset by $0.09 of lower interest expense and $0.04 from operating gains.

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Original source: Mondelez International

Sectors: Confectionery, Emerging markets, Financials, Snacks

Companies: Cadbury, Mondelez International, Kraft Foods Group

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