Mondelez International(US:MDLZ)2025-10-28 20:20Strategic Priorities - The company aims to be the global leader in snacking, focusing on four strategic priorities: consumer-centric growth, operational excellence, winning growth culture, and sustainable snacking [119]. Revenue and Growth - The company anticipates ongoing volatility in future snacks revenue growth due to elevated raw material costs and pricing increases adversely impacting consumer demand, particularly in the U.S. and Europe [121]. - Organic Net Revenue growth is presented on a consolidated basis, reflecting underlying growth from ongoing activities [31]. - Net revenues increased by 5.9% to $9.744 billion in Q3 2025, driven by higher net pricing and favorable currency-related items [162]. - Organic Net Revenue grew by 3.4% to $9.520 billion in Q3 2025, with emerging markets showing a 7.1% increase and developed markets a 1.2% increase [162]. - For the first nine months of 2025, net revenues increased by $1,204 million (4.5%) to $28,041 million, with organic net revenue growth of $1,078 million (4.0%) [174]. - Emerging markets net revenues increased by 6.8%, while developed markets net revenues rose by 3.0% in the first nine months of 2025 [174]. - Net revenues for the nine months ended September 30, 2025, were $28,041 million, an increase of $1,204 million (4.5%) compared to $26,837 million in 2024 [189]. Financial Performance - Adjusted Operating Income for the three months ended September 30, 2025, was $6 million, compared to a loss of $12 million in 2024 [146]. - Adjusted EPS growth is evaluated on a constant currency basis, providing improved comparability of underlying operating results [31]. - Adjusted EPS for Q3 2025 was $0.73, down $0.22 (23.2%) from Q3 2024, while adjusted EPS on a constant currency basis was $0.72, down $0.23 (24.2%) [171]. - Diluted EPS decreased by 9.5% to $0.57 in Q3 2025, primarily due to a decrease in Adjusted EPS and unfavorable year-over-year changes in acquisition-related items [162]. - Operating income decreased by $2,138 million (45.2%) to $2,596 million in the first nine months of 2025, with adjusted operating income down $1,111 million (22.5%) to $3,829 million [177]. - Net earnings attributable to Mondelēz International decreased by $110 million (12.9%) to $743 million in Q3 2025, with diluted EPS down $0.06 (9.5%) to $0.57 [171]. - Total selling, general and administrative expenses rose by $165 million from Q3 2024, driven by higher costs related to the ERP System Implementation program [167]. Acquisitions and Investments - The company completed the acquisition of Evirth (Shanghai) Industrial Co., Ltd, a leading manufacturer of cakes and pastries in China, in the fourth quarter of 2024 [131]. - The acquisition of Evirth added $87 million in incremental net revenues on a constant currency basis in Q3 2025 [163]. - The acquisition of Evirth contributed $288 million in net revenues on a constant currency basis for the first nine months of 2025 [199]. Impairments and Charges - The company recorded an impairment charge of €612 million ($665 million) related to its investment in JDE Peet's during the first quarter of 2024 [132]. - Intangible asset impairment charges totaled $33 million for the three months ended September 30, 2025 [146]. - The Simplify to Grow Program incurred restructuring charges of $6 million for the three months ended September 30, 2025 [146]. - Incremental costs due to the war in Ukraine included asset write-downs, net of recoveries, impacting overall financial results [153]. Currency and Market Risks - The company continues to monitor the impact of geopolitical uncertainties, including trade and regulatory risks, on its operations and financial performance [122]. - Currency-related items contributed an increase of $137 million to net revenues, benefiting from favorable currency translation rate changes [163]. - The company experienced unfavorable currency-related items of $137 million (0.5 pp) for the first nine months of 2025, primarily due to unfavorable currency translation rate changes [136]. - The company is exposed to currency exchange rate, commodity price, and interest rate market risks, which are monitored as part of its risk management program [237]. Operational Challenges - The company faced increased price volatility and higher aggregate costs due to international supply chain disruptions and elevated commodity, transportation, and labor costs [230]. - Cocoa costs are expected to remain elevated compared to historical levels in the near- and medium-term, despite a forecasted decrease in 2026 [230]. - The company’s pricing actions may lag behind commodity cost changes due to competitive market conditions and other factors [231]. - Unfavorable volume/mix was experienced across all regions, reflecting pricing elasticity impacts and soft consumption in North America [166]. Tax and Debt - The effective tax rate improved to 19.7% in Q3 2025 from 28.8% in Q3 2024, influenced by a favorable jurisdictional mix of earnings [170]. - Total debt increased to $21.3 billion as of September 30, 2025, from $17.7 billion as of December 31, 2024, with a debt-to-capitalization ratio of 0.45 [224]. Future Outlook - The company expects capital expenditures for 2025 to be up to $1.3 billion, primarily to modernize manufacturing facilities and support productivity initiatives [218]. - Forward-looking statements in the report include projections of earnings and revenue, as well as management's plans and strategies for future operations [233]. - The company acknowledges inherent risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including macroeconomic volatility and geopolitical factors [234].