Mondelēz reports sales lift but drops growth forecast

By Matt Atherton contact

- Last updated on GMT

Oreo maker Mondelēz International reported a 1.1% boost in organic revenue
Oreo maker Mondelēz International reported a 1.1% boost in organic revenue

Related tags: Revenue, Middle east, Cadbury plc

Mondelēz International reported a 1.1% increase in organic revenue to £5.2bn ($6.4bn) in its third-quarter trading update this week, despite lowering its full-year growth forecast from 2% to 1.6%.

The Cadbury chocolate maker’s revenue boost was driven by its Oreo and Trident gum brands, it said on Wednesday (October 26). It raised its estimated earnings per share for the full year by about 25%, sending its share prices up 4.6% to £36.16 ($44.69) a share.

Mondelēz also said its expenses were reduced by 13.3% to £1.3bn ($1.6bn), compared with the same period last year.

Mondelēz International chairman and ceo Irene Rosenfeld 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 long-term.

‘A stronger, more streamlined company’

“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.”

However, net sales were down 6.6% compared with 2015’s third-quarter update, and 14% down to £15.7bn ($19.2bn) in the year-to-date. Mondelēz blamed the drop in sales on Venezuela’s turbulent economic climate, as it stopped recording sales in the country in February.

The company said that deceleration in some markets – including the Middle East where oil prices had dropped – lowered the demand for its products.

Mondelēz lowered its 2016 growth forecast by 0.4%, blaming the unpredictable foreign exchange rate, the uncertain timing of its cost-cutting scheme and the unpredictable “timing of potential significant items impacting cash flow”​.

Cost-cutting restructuring programme

The group is currently in the middle of a cost-cutting restructuring programme which would last four years, ending in 2018. The majority of the restructuring costs £1.7bn ($2.1bn) were incurred during the company’s 2016 third-quarter, Mondelēz claimed.

Meanwhile, Mondelēz abandoned its pursuit of acquiring its US-based rival Hershey​ in August, after its £18bn ($23bn) offer was rejected. It reported sales of £1.5bn ($1.8bn) in North America in its third-quarter – growth of almost 1% year-on-year.

The chocolate maker also announced it purchased the license​ to make Cadbury’s Fingers and Animals products in August, from Burton’s Biscuit Company.

Mondelēz Europe said at the time that the deal offered it “exciting opportunities to expand global growth and innovation”​.

Mondelēz International Q3 trading update – at a glance

  • Organic sales up 1.1%
  • Full-year growth forecast down 0.4%
  • Net sales down 14% in year-to-date

Related topics: Confectionery

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