Mondelēz International Reports Q1 2024 Results

“We posted solid top-line results coupled with robust earnings and free cash flow generation in the first quarter driven by strong pricing execution, effective cost management and emerging market momentum,” said Dirk Van de Put, Chair and Chief Executive Officer. “Despite facing a challenging and dynamic operating environment, our teams remained focused and agile in executing against our long-term growth strategy. We continue to reinvest in our brands, drive distribution gains and capture synergies from recently acquired assets to drive sustainable long-term growth.”

• Net revenues increased +1.4% driven by Organic Net Revenue1 growth of +4.2% with underlying Volume/Mix of -2.1%
• Diluted EPS was $1.04, down 31.6%; Adjusted EPS1 was $0.95, up +16.3% on a constant currency basis
• Cash provided by operating activities was $1.3 billion, up $0.2 billion versus prior year; Free Cash Flow1 was $1.0 billion, up $0.1 billion versus prior year
• Return of capital to shareholders was $1.1 billion

First Quarter Commentary

Net revenues increased 1.4 percent driven by Organic Net Revenue growth of 4.2 percent and incremental net revenue from a short-term distributor agreement related to the sale of our developed market gum business, partially offset by the impact of our 2023 divestiture of the developed market gum business and unfavorable currency-related items. Organic Net Revenue growth was driven by higher net pricing, partially offset by unfavorable volume/mix.

Gross profit increased $1,304 million, and gross profit margin increased 1,350 basis points to 51.1 percent primarily driven by favorable year-over-year change in mark-to-market impacts from derivatives and an increase in Adjusted Gross Profit1 margin. Adjusted Gross Profit increased $384 million at constant currency, and Adjusted Gross Profit margin increased 240 basis points to 39.2 percent due to higher pricing, lower manufacturing costs driven by productivity and favorable product mix, partially offset by higher raw material and transportation costs.

Operating income increased $1,222 million, and operating income margin was 29.4 percent, up 1,300 basis points primarily due to favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, higher Adjusted Operating Income margin, lower divestiture-related costs and lower remeasurement loss of net monetary position. These favorable items were partially offset by the impact of the 2023 divestiture of the developed market gum business, higher incremental costs due to the war in Ukraine and higher costs incurred for the Simplify to Grow program. Adjusted Operating Income increased $256 million at constant currency while Adjusted Operating Income margin increased 160 basis points to 18.5 percent, driven primarily by higher net pricing, lower manufacturing costs driven by productivity and favorable product mix, partially offset by input cost inflation and higher advertising and consumer promotion costs.

Diluted EPS was $1.04, down 31.6 percent, primarily due to a non-cash impairment charge on our JDEP equity method investment in 2024, lapping prior-year gains on marketable securities and equity method investment transactions related to our former KDP investment, lapping prior-year operating results from the developed market gum business divested in 2023 and higher costs incurred from our Simplify to Grow program. These unfavorable items were partially offset by a favorable year-over-year change in mark-to-market impacts from currency and commodity derivatives, an increase in Adjusted EPS, lower divestiture-related costs, lower acquisition integration costs and contingent consideration adjustments and lower equity method investee items.

Adjusted EPS was $0.95, up 16.3 percent on a constant currency basis driven by strong operating gains, lower interest expense and fewer shares outstanding, partially offset by higher taxes.

Capital Return: The company returned $1.1 billion to shareholders in cash dividends and share repurchases.

 2024 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 2024, the company expects Organic Net Revenue growth of 3 to 5 percent, high single-digit Adjusted EPS growth on a constant currency basis based on 2023 Adjusted EPS incl. developed market gum1. The company expects for 2024 Free Cash Flow of $3.5+ billion. The company estimates currency translation would decrease 2024 net revenue growth by approximately 1.5 percent3 with a negative $0.10 impact to Adjusted EPS3.

Outlook is provided in the context of greater than usual volatility as a result of geopolitical uncertainty.