Mondelez International stressed its objective to improve profit margins as the group posted another quarter of declining sales today (26 October).
In its third-quarter earnings release, Mondelez said net revenue fell 6.6% to US$6.39bn as foreign exchange and declining volumes in Latin America, Eastern Europe, the Middle East and North Africa weighed. On an organic basis, revenue edged up 1.1%, the chocolate maker noted.
The company, which is lapping issues in Venezuela and gains from the spin-off of its coffee business, said reported operating income increased 91% in the quarter to $702m. Operating income margin was 11%, down 103 percentage points year-on-year. However, adjusted operating margin expanded 220 basis points to 15.8%, reflecting lower overhead costs and the benefits of its zero-based budgetingi initiative, Mondelez said.
“Our third-quarter results underscore our continued commitment to improve operational efficiency, expand margins and profitably grow volume while also investing in strategic growth initiatives for the longer term,” said Irene Rosenfeld, chairman and CEO. “In the face of challenging market conditions, we’re building a stronger, more streamlined company that is well positioned to deliver sustainable, profitable growth and attractive cash generation.”
Net earnings were up 80.1% to $1.56bn. Mondelez raised its 2016 adjusted per-share earnings outlook to an increase of roughly 25% excluding currency exchange. Mondelez previously projected double-digit adjusted per-share profit to grow. The company said it expects sales to grow by 1.6%.