Mondelez International has raised its organic growth outlook by up to three percentage points as the confectionery giant increased volumes and prices.
Volume/mix rose 3.8% in the third quarter and 2.4% for the year so far, boosted by sales from Mexican confectionery business Ricolino and energy-bar brand Clif Bar, two acquisitions Mondelez struck last year.
While the publicly-listed company upped its organic growth guidance to 14-15%, from 12% previously, Mondelez also provided a cautionary note. The “outlook is provided in the context of greater-than-usual volatility as a result of geopolitical uncertainty”, it said.
Adjusted earnings per share are also expected to come in higher than previously envisaged on a currency-neutral basis – growth of around 16%, compared to 12%.
Mondelez continued to raise prices despite a general easing in global inflation rates in some of its key markets, with increases of 11.9% and 14.6%, respectively, across the two periods. The gross margin climbed five percentage points for the quarter to 38.7% and was up 2.5 points at 38.6% year to date.
Third-quarter organic growth to 30 September was 15.7% based on sales of $9.1bn, while the metric advanced 17% during the nine months to $26.7bn. In reported terms, growth was 16.3% and 17.1%.
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CEO Dirk Van de Put said: “We delivered strong third-quarter results that reinforce the durability of our categories, strength of our brands and geographies, and consistency of our execution.
“All regions delivered strong revenue growth with double-digit profitability growth, underpinned by strong volume/mix performance.”
Emerging markets led growth, with sales of $3.5bn and $10.4bn to deliver organic prints of 19% and 22.5%. The reporting division posted a 3.4% increase in volume/mix and pricing of 15.6% for the quarter. Year to date, volumes were up 3.4 percentage points and pricing 19.1 points.
In the developed arena, Mondelez’s sales were $5.5bn and $16.2bn, respectively, with organic growth of 13.4% and 16.7%. Volume/mix climbed by 3.9 points and 1.7 points. Prices were hiked by 9.5% and 11.8%.
Mondelez said the Ricolino confectionery business added $180m to its third-quarter revenue and $506m for the year so far. Operating income was boosted by $15m and $31m, respectively.
The Clif Bar brand provided a revenue lift of $71m for the quarter and $529m over the nine months. In terms of operating income, it contributed $11m and $81m.
For the Mondelez group as a whole, operating profit rose 20.6% for the quarter to $1.4bn on a reported basis and climbed 18.7% to $4.3bn for the year so far.
Third-quarter net profit was $984m, representing a 12.9% reported increase. Year to date it was $4.1bn, up 12%.
Adjusted EPS was $0.82, up 16.7% in the quarter on a constant-currency basis, and came in at $2.46 for the year, a rise of 13.4%.
Mondelez provided a note on the impact of the war in Ukraine. In the wake of the February 2022 invasion, the company said its two facilities in Trostyanets and Vyshhorod were “significantly damaged” in March of that year.
The business incurred costs of $143m to repair those facilities in the first quarter of 2022 but recovered $22m over the course of that year and another $2m over the first nine months of 2023.