Mondelez International today (2 May) reported a dip in first-quarter sales but higher profits in a set of results the snacks giant described as “a solid start” to the year and which included adjusted earnings that beat analyst forecasts.
The Cadbury owner booked a 0.6% fall in its net revenues to US$6.41bn for the first quarter of 2017. Of Mondelez’s four geographic regions, only Latin America reported rising sales, climbing 11.4% to $910m.
The US-based snacks maker said the impact of exchange rates weighed on its top line, pointing to an increase in its net revenue on an organic basis (see below).
Mondelez’s reported first-quarter profits rose, its operating income up 16.3% at $840m and its net earnings climbing 13.7% to $630m. The company said its operating income was supported by an improvement in its adjusted operating income margin and the settlement of a Cadbury tax matter.
Chairman and CEO Irene Rosenfeld pointed to the “organic top-line growth” generated by Mondelez during the first quarter.
However, the Oreo maker’s organic revenues inched up by only 0.6% – and that result was boosted by a 1.1 percentage point improvement in pricing.
In 2016 as a whole, Mondelez’s organic net revenue rose 1.3%.
Mondelez reported rising organic revenues from Latin America, Europe and its combined Asia, the Middle East and Africa division, though of the three units, only Europe saw volumes/mix rise.
In North America, Mondelez’s net revenues fell 1.9% on an organic basis, with volumes/mix down 1.4%.
Mondelez continued to see improvements in its operating margins, both on a reported and adjusted basis.
The company, as with many of its peers in the US food sector, has been working on improving its margins and has seen its full-year adjusted operating income margin rise from 12.9% in 2014 to 15.3% in 2016. It is targeting an annual adjusted operating income margin of 17-18% by 2018.
It said the year-on-year growth it saw in the first quarter of 2017 was “due primarily to continued reductions in overhead costs and supply chain productivity savings”.
Mondelez’s adjusted first-quarter earnings per share were $0.53, above an analyst consensus forecast of $0.50.
Rosenfeld said: “We had a solid start to the year despite challenging market conditions. We delivered both top-line organic growth and strong margin expansion in the quarter, while also making critical investments for our future. We remain confident in and committed to our balanced strategy for both top- and bottom-line growth, continuing to focus on what we can control to deliver long-term value creation for our shareholders.”