Mondelez International(MDLZ) - 2024 Q2 - Quarterly Report

Financial Performance - Net revenues decreased 1.9% to $8.3 billion in Q2 2024 and decreased 0.2% to$ 17.6 billion in the first six months of 2024 compared to the same periods in the prior year[134]. - Organic Net Revenue increased 2.5% to $8.6 billion in Q2 2024 and increased 3.4% to$ 18.0 billion in the first six months of 2024 compared to the same periods in the prior year[134]. - Diluted EPS attributable to Mondelēz International decreased 34.8% to $0.45 in Q2 2024 and decreased 32.3% to$ 1.49 in the first six months of 2024 compared to the same periods in the prior year[134]. - Adjusted EPS increased 19.4% to $0.86 in Q2 2024 and increased 15.9% to$ 1.82 in the first six months of 2024 compared to the same periods in the prior year[134]. - Net revenues decreased by $164 million (1.9%) to$ 8,343 million in Q2 2024, while Organic Net Revenue increased by $209 million (2.5%) to$ 8,559 million[139]. - The company experienced a net revenue decrease of 0.2% to $17.633 billion for the six months ended June 30, 2024, impacted by unfavorable currency-related items and the divestiture of the developed market gum business[149]. - The company’s diluted EPS attributable to Mondelēz International decreased to$ 1.49 for the six months ended June 30, 2024, down from $2.20 in the same period of 2023, reflecting a 32.3% decline[149]. Operating Income and Expenses - Operating income fell by$ 571 million (40.1%) to $854 million in Q2 2024 compared to$ 1,425 million in the same period last year[139]. - Adjusted Operating Income increased by $223 million (17.6%) to$ 1,492 million, with constant currency basis showing a $280 million (22.1%) increase[141]. - Total selling, general and administrative expenses increased by$ 22 million from Q2 2023, with a net increase of $79 million when excluding divestiture-related benefits, driven mainly by higher advertising and consumer promotion costs[144]. - Total selling, general and administrative expenses rose by$ 105 million compared to the first six months of 2023, with an underlying increase of $217 million driven by higher advertising and consumer promotion costs[156]. - Segment operating income for North America decreased by$ 35 million (6.1%) to $545 million for the three months ended June 30, 2024, compared to$ 580 million in the same period of 2023[163]. - Segment operating income for Europe increased by $185 million (19.4%) to$ 1,141 million for the six months ended June 30, 2024, compared to $956 million in the same period of 2023[179]. Currency and Commodity Impact - Unfavorable currency-related items impacted Organic Net Revenue by$ 216 million (2.6pp) in Q2 2024 and $348 million (2.0pp) in the first six months of 2024[124][125]. - Currency-related items negatively impacted net revenues by$ 216 million, primarily due to unfavorable currency translation rates[140]. - Currency-related items negatively impacted operating income by $57 million, primarily due to the strength of the U.S. dollar against various currencies[145]. - Unfavorable currency changes decreased operating income by$ 127 million, primarily due to the strength of the U.S. dollar against various currencies[157]. - The company anticipates facing higher cocoa costs in the near- and medium-term, with cocoa prices on the Intercontinental Exchange up 175% compared to the same day in the second quarter of 2023[201]. - The company utilizes hedging and pricing strategies to manage commodity cost fluctuations, although full protection against price increases may not be achievable[202]. Business Segments and Market Performance - The operations in Russia generated 2.9% of consolidated net revenue in Q2 2024, compared to 2.8% in Q2 2023[119]. - Emerging markets net revenues decreased by 1.4%, while Organic Net Revenue in emerging markets increased by 4.5%[140]. - Developed markets net revenues decreased by 2.3%, with Organic Net Revenue growth of 1.2%[140]. - Latin America net revenues increased by $4 million (0.3%) to$ 1,232 million for the three months ended June 30, 2024, driven by higher net pricing[165]. - The company experienced declines in chocolate, cheese & grocery, gum, candy, and refreshment beverages, partially offset by gains in biscuits & baked snacks[165]. Strategic Initiatives and Investments - The company approved funding of $1.2 billion for a multi-year ERP System Implementation program expected to be completed by year-end 2028[122]. - The Board of Directors approved funding of$ 1.2 billion for a multi-year ERP and supply chain systems transformation program, expected to be completed by year-end 2028[16]. - The company is engaged in discussions with the European Commission regarding an investigation into competition law practices[211]. Risk Management and Forward-Looking Statements - Key risks include macroeconomic weakness, commodity cost volatility, geopolitical uncertainty, and competition pressures[207]. - The company acknowledges that actual results may differ materially from forward-looking statements due to various risks and uncertainties[207]. - Future financial conditions and results are subject to change based on evolving risks and uncertainties, as detailed in SEC filings[207]. Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures to provide additional insights into operating results and trends[208]. - "Organic Net Revenue" excludes impacts from acquisitions, divestitures, and currency fluctuations, reflecting underlying business growth[209]. - Adjusted Operating Income excludes costs related to restructuring, acquisitions, and other significant items for better comparability[209]. - Adjusted EPS is calculated excluding specific impacts such as losses on debt extinguishment and tax law changes, providing clearer performance insights[211]. - The company has begun excluding the impact of extreme pricing in Argentina from non-GAAP measures due to hyperinflation concerns[211].