Actions taken on pricing and moves to improve productivity appear to be paying off for Mondelez International.

Despite a fall in first-half reported sales and profits as a result of foreign currency effects and charges, the Oreo owner enjoyed improved underlying results and yesterday (30 July) lifted its forecasts for annual organic sales and underlying margins.

For the second half and full year, Mondelez has updated its organic net revenue forecast to growth of 3% from 2%. The company said the move reflected its "strong year-to-date performance". The company expects its adjusted operating income margin to be around 14%.

Since the start of the year, the company has made a number or headcount reductions in a bid to improve efficiency. In January, it announced 200 job cuts at its Bournville site in the UK, followed by a further 160 positions at a site in Ireland. In May it said it would reduce its workforce at its Cadbury Australia plant by 80 and yesterday it revealed it would axe 600 jobs at its plant in Chicago after selecting the Salinas biscuit plant in Mexico for a US$160m investment.

Like Salinas, many of the cuts have been backed by investments into more up-to-date production techniques to improve operational efficiency, while there has been selected expansion Salinas will see the addition of four new production lines replacing nine "out-of-date" lines. In Egypt, the Barni maker has invested US$131m over the last five years into new lines and employee development and training. In May, it announced it had opened a Marvellous Creations production line in the country to serve the domestic market and wider GCC region. Similarly, Mondelez has started Oreo production in Morocco – a move expected to boost the product's availability to locals at a more affordable price point.

Discussing Mondelez's first-half results on a conference call with investors yesterday (30 July), CEO Irene Rosenfeld said: "On the cost front we drove record net productivity in our supply chain and continued to reduce overheads as a percentage of revenue, driven by strong execution of our zero-based budgeting initiative. While continuing to improve profitability, we have also begun to stage the business for accelerated growth."

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In the second quarter, Mondelez reported a gross margin increase of 330 basis points to more than 40% with productivity driving more than half the improvement, according to CFO Brian Gladden.

"In the quarter, we delivered strong net productivity of more than 3% of COGS, or about $175m, which continues to be a record level of productivity for us, and benchmarks well versus peers."

Costs as a percentage of revenue in terms of overheads were down in the first half. Gladden pointed out during the first half the firm delivered "strong net productivity even before realising any meaningful benefits from the new state of the assets that are now coming on stream".

New high-speed and lower-cost production lines are being installed in the US, Europe, India and China in the coming months, which Mondelez is looking to see the benefits from in the second half.

"With momentum from our supply chain and overhead cost savings programmes, we're increasingly confident in our ability to deliver adjusted operating income margin of 15% to 16% in 2016," Gladden said.

Elsewhere, the company has reaped the benefits of pricing actions it had taken at the end of last year. Organic revenue during the second quarter grew 4.3% led by moves to recover commodity and currency-driven input costs.

"As we've discussed before, this [higher pricing] protects profits and enables us to continue to invest in our brands and innovation platforms," said Rosenfeld.

In some of its key markets, the impact of pricing was evident. Revenues in Russia for example were up more than 20% for the quarter with growth driven by pricing in response to the sharp devaluation of the ruble.

Rosenfeld said Mondelez had "gotten a lot better about executing pricing actions".

"We used to price once a year. Now we're pricing far more frequently, particularly in a number of the more volatile markets. But for the most part, we are pricing to recover our cost increases, and you're seeing that play through in the margins, as well as in the revenue."

But in Europe, early price increase decisions did impact sales, specifically in chocolate. Overall in Europe, revenues in the second quarter fell 16.7% to US$2.8m. Mondelez has led price increases against its competitors. However, it does expect things to level out when competitor price increases hit in the third quarter.

"Net-net we're not entirely pleased yet with our performance in Europe, but it is playing out, essentially, the way we had expected. And we do expect back half to see stronger performance as price gaps narrow," assured Rosenfeld.

The company seemed upbeat about its prospects for the remainder of the year. Gladden said there are "continued margin opportunities" for 2015 to 2016.

"As we look at the supply chain reinvention and restructuring activities that are going on we would expect to have further margin opportunities, and I think it really comes down to striking that balance between growth and margin, and we want to retain some of that flexibility to strike that balance, depending upon how the market plays out."

And industry experts seemed to react positively too.

Alexia Howard, analyst at Bernstein Research said she remained "confident" in the margin expansion story in the second half as Mondelez's Salinas plant ramps up production as will the lines opening in Europe, India, China and other markets which will also support margin growth.

"Beyond 2015, we believe Mondelez is poised to achieve the top end of its 15-16% operating margin in FY16, but that the company has further margin expansion opportunities as it is still relatively inefficient vs. peers."