Business Overview - The company's core business includes chocolate, biscuits, baked snacks, gum & candy, cheese & grocery, and powdered beverages globally[120] - The company aims to be the global leader in snacking by focusing on consumer-centric growth, operational excellence, culture, and sustainable snacking[121] Financial Performance - Net revenues increased 1.9% to 9.2billioninQ32024and0.526.8 billion in the first nine months of 2024, driven by higher net pricing and favorable volume mix, partially offset by divestiture impacts and unfavorable currency-related items[144] - Organic Net Revenue, a non-GAAP measure, increased 5.4% to 9.3billioninQ32024and4.027.3 billion in the first nine months of 2024, driven by higher net pricing and favorable volume/mix[144] - Diluted EPS decreased 12.5% to 0.63inQ32024and27.42.12 in the first nine months of 2024, impacted by mark-to-market losses, higher intangible asset impairment charges, and ERP system implementation costs[144] - Adjusted EPS, a non-GAAP measure, increased 28.6% to 0.99inQ32024and19.12.80 in the first nine months of 2024, driven by operating gains, fewer shares outstanding, and lower interest expense[144] - Emerging markets net revenues increased 0.1% in Q3 2024, while Organic Net Revenue in emerging markets grew 4.9%, driven by higher net pricing[148] - Developed markets net revenues increased 3.1% in Q3 2024, while Organic Net Revenue in developed markets grew 5.6%, driven by higher net pricing and favorable volume/mix[148] - Net earnings attributable to Mondelēz International decreased 13.3% to 853millioninQ32024,drivenbyloweroperatingincomeandhigherimpairmentcharges[148]−Netrevenuesincreasedby135 million (0.5%) to 26,837millioninthefirstninemonthsof2024comparedto26,702 million in the same period of 2023[160] - Net earnings attributable to Mondelēz International decreased by 1,143million(28.52,866 million in the first nine months of 2024 compared to 4,009millioninthesameperiodof2023[160]−OrganicNetRevenueincreasedby4.0483 million reduction due to the 2023 divestiture of the developed market gum business[161] - Currency-related items decreased net revenues by 468millionduetounfavorablecurrencytranslationratechanges[161]−AdjustedOperatingIncomeincreasedby709 million (16.8%) on a constant currency basis[162] - Higher net pricing contributed 1,417milliontoAdjustedOperatingIncome,partiallyoffsetbyhigherinputcostsof190 million[163] - Selling, general and administrative expenses increased by 270million,drivenbyhigheradvertisingandconsumerpromotioncosts[165]−Operatingincomemarginincreasedfrom16.1143 million, primarily due to the strength of the U.S. dollar[166] - The short-term distributor agreement added incremental net revenues of 25millionforthefirstninemonthsof2024[161]−DilutedEPSattributabletoMondeleˉzInternationaldecreasedby0.80 (27.4%) to 2.12fortheninemonthsendedSeptember30,2024,comparedto2.92 in the same period in 2023[169] - Adjusted EPS (constant currency) increased by 0.54(23.02.89 for the nine months ended September 30, 2024, driven by a 0.47increaseinoperationsanda0.05 change in shares outstanding[169] Regional Performance - The company's operations in Ukraine and Russia generated 0.4% and 2.9% of consolidated net revenue in Q3 2024, respectively[125] - Net revenues for Latin America decreased by 101million(7.731 million (19.9%) for the three months ended September 30, 2024, primarily due to higher raw material costs and unfavorable currency-related items[177] - Net revenues for AMEA increased by 60million(3.41.851 billion for the three months ended September 30, 2024, compared to 1.791billioninthesameperiodin2023[180]−SegmentoperatingincomeforAMEAincreasedby33 million (10.9%) to 335millionforthethreemonthsendedSeptember30,2024,comparedto302 million in the same period in 2023[180] - Net revenues for Europe increased by 237million(7.73.323 billion for the three months ended September 30, 2024, compared to 3.086billioninthesameperiodin2023[174]−SegmentoperatingincomeforEuropeincreasedby111 million (22.5%) to 605millionforthethreemonthsendedSeptember30,2024,comparedto494 million in the same period in 2023[174] - Net revenues for North America decreased by 21million(0.72.826 billion for the three months ended September 30, 2024, compared to 2.847billioninthesameperiodin2023[174]−SegmentoperatingincomeforNorthAmericaincreasedby386 million (72.6%) to 918millionforthethreemonthsendedSeptember30,2024,comparedto532 million in the same period in 2023[174] - Net revenues increased by 60million(3.433 million (10.9%) for the three months ended September 30, primarily due to higher net pricing and lower manufacturing costs, partially offset by higher advertising and raw material costs[182] - Net revenues increased by 49million(0.9167 million (19.2%) for the nine months ended September 30, primarily due to higher net pricing and lower manufacturing costs, partially offset by higher raw material costs and unfavorable currency translation rate changes[184] - Net revenues in Europe increased by 237million(7.7111 million (22.5%) for the three months ended September 30, primarily due to higher net pricing, favorable volume/mix, and lower divestiture-related costs[187] - Net revenues in North America decreased by 21million(0.7386 million (72.6%) for the three months ended September 30, primarily due to a favorable contingent consideration adjustment and lower acquisition integration costs[192] Cost and Expense Management - The company faces higher operating costs due to inflationary pressures, supply constraints, and rising cocoa costs, with cocoa prices significantly higher year-over-year[122] - Higher cocoa, sugar, nuts, and other ingredient costs drove the increase in aggregate commodity costs in the first nine months of 2024, partially offset by lower energy, dairy, edible oils, grains, and packaging costs[212] - The company expects higher cocoa costs in the near- and medium-term due to international supply chain and labor market disruptions[214] - The company uses hedging, higher pricing, and manufacturing and overhead cost control to address higher commodity costs and currency impacts[215] - The company's commodity procurement practices aim to mitigate price volatility but may limit the ability to benefit from future price decreases[215] - Total selling, general and administrative expenses decreased by 389millioninQ32024comparedtoQ32023[154]−Selling,generalandadministrativeexpensesincreasedby270 million, driven by higher advertising and consumer promotion costs[165] Strategic Initiatives and Investments - The company approved 1.2billionforamulti−yearERPandsupplychainsystemsupgrade,withexpectedcompletionbyyear−end2028[128]−ThecompanyannouncedtheacquisitionofamajoritystakeinEvirth(Shanghai)IndustrialCo.,Ltd,aleadingcakeandpastrymanufacturerinChina[133]−Thecompanysolditsremaining85.9millionsharesinJDEPeet′sforapproximately€2.2billion(2.4 billion), expected to complete in Q4 2024[137] - The company expects 2024 capital expenditures to be up to 1.5billion,primarilyformodernizingmanufacturingfacilitiesandsupportingproductivityinitiatives[200]−ERPSystemImplementationprogramapprovedwith1.2 billion funding, expected to complete by year-end 2028, with majority operating expenses excluded from non-GAAP measures[225] Non-GAAP Measures and Adjustments - The company excluded extreme pricing in Argentina (over 26% year-over-year) from non-GAAP financial measures starting Q1 2024[129] - Adjusted EPS excludes extreme pricing impact in Argentina due to a 26% year-over-year devaluation of the Argentinean peso, effective Q1 2024[223] - Divestitures include JDE Peet's ownership reductions, reflected in non-GAAP results the following quarter[223] - Non-GAAP measures exclude unrealized gains/losses from commodity and currency derivatives until exposures impact operating results[223] - Incremental costs related to the Russia-Ukraine war, including asset impairments and uncollectible accounts, are excluded from operating results[223] - European Commission legal matter resolved with payment obligation fulfilled in August 2024, excluded from non-GAAP measures[225] - Pension participation changes and multiemployer plan withdrawals excluded from non-GAAP results[225] - Acquisition-related costs, including transaction fees and ESOP buyouts, excluded from non-GAAP measures[223] - Integration costs and contingent consideration adjustments for acquisitions excluded from non-GAAP measures[223] - Highly inflationary accounting impacts for Argentina and Türkiye excluded from non-GAAP measures[223] Debt and Capital Structure - Total debt as of September 30, 2024 was 19.8billion,comparedto19.4 billion as of December 31, 2023, with a debt-to-capitalization ratio of 0.42 and 0.41 respectively[209] - The weighted-average term of outstanding long-term debt was 7.9 years as of September 30, 2024[209] - Average daily commercial paper borrowings outstanding were 1.0billioninthefirstninemonthsof2024,downfrom2.7 billion in the same period of 2023[209] - The company paid dividends of 1,722millioninthefirstninemonthsof2024,comparedto1,581 million in the same period in 2023[204] Market and Commodity Trends - Cocoa bean prices on the Intercontinental Exchange in London were 79% higher on the last trading day of Q3 2024 compared to the same day in Q3 2023[214] - The company expects ongoing volatility in snacks revenue growth but remains optimistic about future growth[123] Operational Metrics - Operations held by MIHN generated 72.8% (19.5billion)ofthe26.8 billion consolidated net revenue for the nine months ended September 30, 2024[210] - Operations held by MIHN represented 82.8% (23.1billion)ofthe27.9 billion net assets as of September 30, 2024[210]
Mondelez International(MDLZ)2024-10-29 20:14