- Net revenues increased +18.1% driven by Organic Net Revenue1 growth of +19.4% with underlying Volume/Mix of +3.2%
- Diluted EPS was $1.52, up 149.2%; Adjusted EPS1 was $0.89, up +17.3% on a constant currency basis
- Cash provided by operating activities was $1.0 billion, in line with prior year; Free Cash Flow1 was $0.9 billion, down -$0.1 billion versus prior year
- Return of capital to shareholders was $0.9 billion
- Raising both Organic Net Revenue growth outlook to 10%+ and Adjusted EPS growth outlook to 10%+
According to the company’s website press release on April 27, 2023, Mondelēz International, Inc. (Nasdaq: MDLZ) reported its first quarter 2023 results.
“We delivered a strong start to the year, with double-digit net revenue and profit dollar growth in our first quarter, as we continued to execute against our long-term strategy. These results were driven by ongoing pricing execution to offset cost inflation and solid volume growth,” said Dirk Van de Put, Chairman and Chief Executive Officer. “We saw broad-based demand across both developed and emerging markets, as consumers around the world continue to prioritize our chocolate, biscuits, and baked snacks categories and brands. We also continued to make significant progress against our portfolio reshaping initiatives, reducing our coffee equity stakes, while driving strong top- and bottom-line synergies from recently acquired assets, including Clif Bar. Our dedicated people remain focused on accelerating and compounding growth through significant investments in our brands, talent and capabilities, while advancing our sustainability initiatives. Given our strong Q1 performance, we are raising our net revenue and earnings outlook for the year.”
First Quarter Commentary
- Net revenues increased 18.1 percent driven by Organic Net Revenue growth of 19.4 percent, and incremental sales from the company's 2022 acquisitions of Clif Bar and Ricolino, partially offset by unfavorable currency. Pricing and volume drove Organic Net Revenue growth.
- Gross profit increased $463 million, and gross profit margin decreased 80 basis points to 37.6 percent primarily driven by a decrease in Adjusted Gross Profit1 margin, partially offset by lapping prior-year incremental costs due to the war in Ukraine and favorable year-over-year change in mark-to-market impacts from derivatives. Adjusted Gross Profit increased $547 million at constant currency, while Adjusted Gross Profit margin decreased 170 basis points to 37.1 percent due to higher raw material and transportation costs, partially offset by pricing.
- Operating income increased $411 million and operating income margin was 16.4 percent, up 230 basis points primarily due to lapping prior-year incremental costs due to the war in Ukraine, lapping prior-year intangible asset impairment charges, lapping prior-year acquisition-related costs and favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, partially offset by a decrease in Adjusted Operating Income margin, higher divestiture-related costs, higher acquisition integration costs and contingent consideration adjustments and higher remeasurement loss of net monetary position. Adjusted Operating Income increased $285 million at constant currency while Adjusted Operating Income margin decreased 60 basis points to 17.2 percent, with input cost inflation, partially offset by pricing and SG&A leverage.
- Diluted EPS was $1.52, up 149.2 percent, primarily due to mark-to-market gain on marketable securities, gain on equity method investment transactions, lower incremental costs due to the war in Ukraine, an increase in Adjusted EPS and lapping a prior-year loss on debt extinguishment.
- Adjusted EPS was $0.89, up 17.3 percent on a constant currency basis primarily driven by strong operating gains, fewer shares outstanding and lower taxes, partially offset by higher interest expense.
- Capital Return and Renewal of Share Repurchase Program: The company returned $0.9 billion to shareholders in cash dividends and share repurchases.
2023 Outlook
Mondelēz International provides its outlook on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange. Refer to the Outlook section in the discussion of non-GAAP financial measures below for more details.
For 2023, the company is updating its 2023 fiscal outlook and now expects 10+ percent Organic Net Revenue growth versus the prior outlook of 5 to 7 percent, which reflects the strength of its year-to-date performance. The company's expectation for Adjusted EPS growth on a constant currency basis is now 10+ percent versus the prior outlook of high single digits. The company's Free Cash Flow outlook remains at $3.3+ billion. The company estimates currency translation would decrease 2023 net revenue growth by approximately 2 percent4 with a negative $0.09 impact to Adjusted EPS4.
Outlook is provided in the context of greater than usual volatility as a result of COVID-19 and geopolitical uncertainty.
Conference Call
Mondelēz International will host a conference call for investors with accompanying slides to review its results at 5 p.m. ET. A listen-only webcast will be provided at www.mondelezinternational.com. An archive of the webcast will be available on the company’s web site.
About Mondelēz International
Mondelēz International, Inc. (Nasdaq: MDLZ) empowers people to snack right in over 150 countries around the world. With 2022 net revenues of approximately $31 billion, MDLZ is leading the future of snacking with iconic global and local brands such as Oreo, Ritz, LU, Clif Bar and Tate's Bake Shop biscuits and baked snacks, as well as Cadbury Dairy Milk, Milka and Toblerone chocolate. Mondelēz International is a proud member of the Standard and Poor’s 500, Nasdaq 100 and Dow Jones Sustainability Index. Visit www.mondelezinternational.com or follow the company on Twitter at www.twitter.com/MDLZ.
End Notes
- Organic Net Revenue, Adjusted Gross Profit (and Adjusted Gross Profit margin), Adjusted Operating Income (and Adjusted Operating Income margin), Adjusted EPS, Free Cash Flow and presentation of amounts in constant currency are non-GAAP financial measures. Please see discussion of non-GAAP financial measures at the end of this press release for more information.
- Earnings attributable to Mondelēz International.
- Please see discussion of "Reconciliation of GAAP and Non-GAAP Financial Measures - Items Impacting Comparability of Operating Results" at the end of this press release for more information.
- Currency estimate is based on published rates from XE.com on April 21, 2023.
Additional Definitions
Emerging markets consist of the Latin America region in its entirety; the Asia, Middle East and Africa region excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, Türkiye, Kazakhstan, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.
Developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the Asia, Middle East and Africa region.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words, and variations of words, “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “drive,” “seek,” “aim,” “target,” “potential,” “commitment,” “outlook,” “continue” or any other similar words.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results or performance to differ materially from those contained in or implied by our forward-looking statements include, but are not limited to, the following:
- weakness in macroeconomic conditions in our markets, including as a result of inflation (and related monetary policy actions by governments in response to inflation), instability of certain financial institutions, volatility of commodity and other input costs and availability of commodities;
- geopolitical uncertainty, including the impact of ongoing or new developments in the war in Ukraine, related current and future sanctions imposed by governments and other authorities and related impacts, including on our business operations, employees, reputation, brands, financial condition and results of operations;
- global or regional health pandemics or epidemics, including COVID-19;
- competition and our response to channel shifts and pricing and other competitive pressures;
- pricing actions;
- promotion and protection of our reputation and brand image;
- weakness in consumer spending and/or changes in consumer preferences and demand and our ability to predict, identify, interpret and meet these changes;
- risks from operating globally, including in emerging markets, such as political, economic and regulatory risks;
- the outcome and effects on us of legal and tax proceedings and government investigations, including the European Commission legal matter;
- use of information technology and third party service providers;
- unanticipated disruptions to our business, such as malware incidents, cyberattacks or other security breaches, and supply, commodity, labor and transportation constraints;
- our ability to identify, complete, manage and realize the full extent of the benefits, cost savings or synergies presented by strategic transactions, including our recently completed acquisitions of Ricolino, Clif Bar, Chipita, Gourmet Food, Grenade and Hu, and the anticipated closing of our planned divestiture of our developed market gum business in the United States, Canada and Europe;
- our investments and our ownership interests in those investments, including JDE Peet's and KDP;
- the restructuring program and our other transformation initiatives not yielding the anticipated benefits;
- changes in the assumptions on which the restructuring program is based;
- the impact of climate change on our supply chain and operations;
- consolidation of retail customers and competition with retailer and other economy brands;
- changes in our relationships with customers, suppliers or distributors;
- management of our workforce and shifts in labor availability or labor costs;
- compliance with legal, regulatory, tax and benefit laws and related changes, claims or actions;
- perceived or actual product quality issues or product recalls;
- failure to maintain effective internal control over financial reporting or disclosure controls and procedures;
- our ability to protect our intellectual property and intangible assets;
- tax matters including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes;
- changes in currency exchange rates, controls and restrictions;
- volatility of and access to capital or other markets, the effectiveness of our cash management programs and our liquidity;
- pension costs;
- significant changes in valuation factors that may adversely affect our impairment testing of goodwill and intangible assets; and
- the risks and uncertainties, as they may be amended from time to time, set forth in our filings with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q.
There may be other factors not presently known to us or which we currently consider to be immaterial that could cause our actual results to differ materially from those projected in any forward-looking statements we make. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this press release except as required by applicable law or regulation. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Contacts:
Tracey Noe (Media)
1-847-943-5678
Shep Dunlap (Investors)
1-847-943-5454
