Mondelez International(MDLZ) - 2024 Q2 - Quarterly Results

Financial Performance - Net revenues decreased by 1.9% in Q2 2024, while Organic Net Revenue grew by 2.5% with an underlying Volume/Mix decline of 2.2%[2] - Diluted EPS was $0.45, down 34.8%, while Adjusted EPS was $0.86, up 25.0% on a constant currency basis[2][8] - Gross profit decreased by $557 million, with a gross profit margin of 33.5%, down 590 basis points year-over-year[6] - Operating income decreased by $571 million, resulting in an operating income margin of 10.2%, down 660 basis points[7] - Net earnings attributable to Mondelēz International were $601 million in Q2 2024, a decline of 36.3% compared to $944 million in Q2 2023[22] - Basic earnings per share decreased to $0.45 in Q2 2024 from $0.69 in Q2 2023[22] - Net earnings for the six months ended June 30, 2024, were $2,019 million, a decrease from $3,030 million in the same period of 2023, representing a decline of approximately 33.4%[26] - The company reported a loss on equity method investment transactions of $665 million, impacting net earnings significantly[81] Cash Flow and Capital Expenditures - Year-to-date cash provided by operating activities was $2.1 billion, an increase of $0.2 billion compared to the prior year; Free Cash Flow remained flat at $1.5 billion[2] - The company returned $2.2 billion to shareholders in the first half of 2024, with an announced 11% increase in quarterly dividend to $0.470 per share[9] - Free Cash Flow, defined as net cash provided by operating activities less capital expenditures, is a primary measure used by the company to monitor cash flow performance[31] - The company reported a net cash used in financing activities of $1,604 million for the six months ended June 30, 2024, compared to $3,539 million in the same period of 2023, a reduction of 54.7%[26] - Capital expenditures rose to $666 million in the first half of 2024, up from $495 million in the same period of 2023, indicating a 34.5% increase[26] Revenue and Market Performance - Net revenues for Q2 2024 were $8,343 million, a decrease of 1.9% compared to $8,507 million in Q2 2023[22] - The total reported (GAAP) net revenues for the three months ended June 30, 2024, were $8,343 million, with organic (non-GAAP) revenues of $8,559 million[72] - The company reported a 2.5% change in organic (non-GAAP) revenues for the three months ended June 30, 2024, compared to the same period in the previous year[72] - For the six months ended June 30, 2024, reported net revenues were $17,633 million, a slight increase of 0.2% from $17,673 million in the same period of 2023[73] - The company experienced a $164 million decrease in reported revenues due to divestitures and currency fluctuations[73] Cost and Margin Analysis - Adjusted Gross Profit margin increased by 330 basis points to 40.5% due to higher pricing and lower manufacturing costs[6] - Adjusted Operating Income margin increased by 270 basis points to 17.9%, driven by higher net pricing and lower manufacturing costs[7] - Gross profit margin decreased to 33.5% in Q2 2024 from 39.4% in Q2 2023, reflecting increased cost pressures[22] - The adjusted (Non-GAAP) operating income for the three months ended June 30, 2024, was $1,492 million, representing a margin of 17.9%[75] - The year-over-year change in reported (GAAP) gross profit was an increase of 11.0%, while adjusted (Non-GAAP) gross profit increased by 9.2%[77] Strategic Initiatives and Acquisitions - The company completed the sale of its developed market gum business on October 1, 2023, receiving cash proceeds of $1.4 billion and recording a pre-tax gain of $108 million[36] - The company acquired 100% of Grupo Bimbo's confectionery business, Ricolino, for $9 million in integration costs in Q2 2024 and $10 million in Q2 2023[39] - The acquisition of Clif Bar incurred integration costs of $16 million in Q2 2024 and $16 million in Q2 2023, with total costs of $36 million for the first half of 2024 and $55 million for the first half of 2023[40] - The acquisition of Chipita resulted in integration costs of $1 million in Q2 2024 and $4 million in Q2 2023[41] Currency and Tax Impacts - The company recorded net unrealized losses of $573 million from commodity and currency derivatives in Q2 2024, compared to gains of $168 million in Q2 2023[46] - The company recorded a net tax expense of $25 million in Q2 2024 due to enacted tax law changes, compared to $2 million in Q2 2023[55] - The effective tax rate for the three months ended June 30, 2024, was 34.7%[79] - The company reported unfavorable currency-related items of $216 million (2.6pp) for the three months ended June 30, 2024, primarily due to unfavorable currency translation rate changes of $544 million (6.5pp) and partially offset by an adjustment for extreme pricing of $328 million (3.9pp)[67] Future Outlook - For 2024, the company expects Organic Net Revenue growth at the upper end of 3% to 5% and high single-digit Adjusted EPS growth on a constant currency basis[10] - The company's outlook for 2024 includes projected Organic Net Revenue growth and Adjusted EPS growth on a constant currency basis, but it cannot reconcile these projections to reported figures due to unpredictability in currency exchange rates and potential acquisitions or divestitures[70] - Future outlook remains cautious with ongoing market challenges, but the company is focused on strategic growth initiatives and cost management[86]