Mondelez International said on Tuesday that its second-quarter results exceeded Wall Street expectations for both revenue and adjusted profit, supported by continued consumer demand for biscuits and chocolates and the impact of higher pricing. Shares of the company rose nearly 2% in after-hours trading following the results and the upward revision to the companys annual organic revenue outlook.
Topline and margins
Quarterly net revenue reached $9.36 billion, compared with analysts average estimate of $9.20 billion, according to data compiled by LSEG. The company also reported an adjusted gross profit margin improvement of 20 basis points, a result the company attributed to higher net pricing and lower manufacturing costs, partly offset by increased raw material expenses.
Pricing and volumes by region
In North America, Mondelezs largest segment, pricing rose by 2.2 percentage points during the quarter while volumes increased by 1.2 percentage points. In prepared remarks, the company said consumer confidence in North America has partially rebounded from record lows, though energy prices continue to put pressure on household budgets. The company described current consumption as K-shaped, with shoppers moving toward both value-oriented formats and premium options.
Regionally, organic revenue in Latin America increased 8.4% during the quarter, while the Asia, Middle East & Africa region grew 7.1%.
Product mix and innovation
Mondelez noted that, like other food companies, it is adjusting its portfolio to meet rising consumer interest in smaller package sizes and is relying on new product launches to bolster shopper appeal. The company has previously said it is expanding its zero-sugar and gluten-free Oreo offerings in response to growing consumer attention to sugar intake and nutritional choices.
Earnings and guidance
The company's adjusted profit was reported as coming in 5 cents higher than the consensus estimate of 68 cents. Mondelez maintained its annual adjusted profit forecast of flat to up 5% while raising its expected annual organic net revenue growth to at least 2%, up from a previous outlook of flat to up 2%.
Analyst perspective
eMarketer analyst Rachel Wolff commented that the company is shifting portfolio strategies to cater to demand for smaller pack sizes and is leaning on product introductions to increase shopper appeal.
This report focuses on the companys earnings results, regional performance, and guidance adjustments based on the companys public statements and reported figures.