Mondelez International has pared bets for full-year sales growth and also projects a steeper decline in earnings per share amid a drop in third-quarter volumes.
While the Cadbury chocolate maker reported increases in net sales for the third quarter and nine months of fiscal 2025, volume/mix was down for the group across both those periods and also in each geographical business region.
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Mondelez’s shares closed down 2.3% at $60.21 as of the close of trading on the Nasdaq exchange yesterday (28 October) as it updated the guidance.
Organic growth is now projected in the 4%-plus area, compared to a previous forecast of around 5%.
The company also anticipates adjusted earnings per share will decline by about 15% on a constant-currency basis versus the prior estimate for a 10% decrease.
When Mondelez retained its outlook for those metrics at the second-quarter reporting stage in July, the Oreo cookies brand owner said the guidance was provided in the context of “unprecedented cocoa cost inflation”.
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By GlobalDataThe language used in yesterday’s statement was not so specific.
“Outlook is provided in the context of greater than usual volatility, including due to geopolitical, trade and regulatory uncertainty and commodity prices,” Mondelez explained.
However, chairman and CEO Dirk Van de Put gave some insight in his accompanying comments.
“We delivered solid top-line growth despite the impact of record-high cocoa cost inflation, with the third quarter representing peak costs of the year,” van de Put said.
“Although we anticipate challenging conditions to continue in some markets, we are encouraged by recent moderation in cocoa prices, as well as promising signs for a strong cocoa crop this fall.”
The CEO added that his team is “focused on executing clear plans for volume improvement, significantly increasing growth investments, and driving meaningful cost efficiencies”.
For the third quarter, Mondelez delivered an adjusted EPS print of $0.73, a decline of 24.2% from the corresponding period in constant currency terms.
Headline diluted EPS fell 9.5% to $0.57.
Organic net sales grew 3.4% to $9.74bn for the third quarter and were up 5.9% in reported terms. Volume/mix, however, dropped 4.6 percentage points with pricing of 8 percentage points.
Of the four reporting regions – North America, Europe, Latam, and Asia, the Middle East and Africa – the steepest volume/mix decline was in Europe (-7.5%) for the quarter, far more than the 1.8% drop in North America.
Pricing in Europe was 12.6% compared to 1.5% in North America. Organic growth in those two regions was 5.1% and minus 0.3%, respectively.
TD Cowen analyst Robert Moskow framed his response around a “disappointing reset to earnings”.
Moskow wrote in a research note: “Mondelez 3Q org sales of 3.4% missed consensus and management lowered guidance due to higher elasticity in Europe and declining US consumer confidence.
“In addition, while they continue to expect a return to high single-digit EPS growth in 2026, they tamped down investors’ hopes for additional upside from falling cocoa costs by emphasising higher investment spending and price rollbacks on select chocolate products.”
