Mondelez International(US:MDLZ)2023-10-31 16:00Financial Performance - Net revenues increased 16.3% to $9.0 billion in Q3 2023 and 17.1% to $26.7 billion in the first nine months of 2023 compared to the same periods in the prior year[146]. - Organic Net Revenue increased 15.7% to $9.0 billion in Q3 2023 and 17.0% to $26.6 billion in the first nine months of 2023, driven by higher net pricing and favorable volume/mix[147]. - Diluted EPS attributable to Mondelēz International increased 84.6% to $0.72 in Q3 2023 and 89.6% to $2.92 in the first nine months of 2023 compared to the same period in the prior year[148]. - Adjusted EPS increased 13.9% to $0.82 in Q3 2023 and 13.4% to $2.46 in the first nine months of 2023 compared to the same periods in the prior year[149]. - Net revenues increased by $1,266 million (16.3%) to $9,029 million in Q3 2023, with Organic Net Revenue up by $1,215 million (15.7%) to $8,977 million[154]. - Operating income surged by $700 million (103.1%) to $1,379 million compared to Q3 2022[156]. - Net earnings attributable to Mondelēz International increased by $452 million (85.0%) to $984 million[154]. - Diluted earnings per share rose by $0.33 (84.6%) to $0.72[154]. - Operating income rose to $4.3 billion, a 59.6% increase compared to $2.7 billion in the same quarter last year[165]. - Net earnings attributable to Mondelēz International reached $4.0 billion, up 87.9% from $2.1 billion in Q3 2022[165]. - The company reported an operating income margin increase from 8.7% in Q3 2022 to 15.3% in Q3 2023, driven by favorable pricing and productivity improvements[161]. Market and Segment Performance - Emerging markets net revenues rose by 14.0%, while developed markets net revenues increased by 17.8%[155]. - Latin America net revenues for Q3 2023 increased by $392 million (42.9%) to $1,305 million, driven by higher net pricing and the acquisition of Ricolino[180]. - AMEA segment net revenues for Q3 2023 rose by $87 million (5.1%) to $1,791 million, with higher net pricing contributing significantly[187]. - Europe net revenues for Q3 2023 increased by $437 million (16.5%) to $3,086 million, supported by higher net pricing and favorable volume/mix[192]. - North America segment net revenues for Q3 2023 grew by $350 million (14.0%) to $2,847 million, reflecting strong demand across product categories[180]. - Segment operating income for Latin America increased by $44 million (39.3%) to $156 million, primarily due to higher net pricing and lower manufacturing costs[184]. - AMEA segment operating income for Q3 2023 rose by $45 million (17.5%) to $302 million, driven by higher net pricing and productivity improvements[189]. - Europe segment operating income for Q3 2023 increased by $81 million (19.6%) to $494 million, benefiting from higher net pricing and favorable volume/mix[193]. - North America segment operating income for Q3 2023 grew by $67 million (14.4%) to $532 million, reflecting improved operational efficiency[180]. Acquisitions and Strategic Initiatives - The company completed the sale of its developed market gum business to Perfetti Van Melle Group on October 1, 2023, excluding the Portugal business pending regulatory approval[136]. - The acquisition of Ricolino contributed $153 million and Clif Bar added $71 million to net revenues on a constant currency basis[154]. - The acquisition of Ricolino contributed an incremental $446 million in net revenues, while Clif Bar added $529 million through its one-year anniversary[166]. - The company completed several strategic acquisitions, including Ricolino, Clif Bar, and Chipita, which are expected to enhance market presence and operational synergies[220]. Cost and Expense Management - Selling, general and administrative expenses increased by $135 million year-over-year, influenced by acquisitions and higher advertising costs[159]. - Total selling, general and administrative expenses increased by $490 million, primarily due to higher advertising and consumer promotion costs[171]. - Higher net pricing contributed $3,327 million to Adjusted Operating Income, while increased input costs negatively impacted it by $2,195 million[168]. - Adjusted Operating Income increased by $258 million (20.6%) to $1,511 million, with a constant currency increase of $307 million (24.5%) to $1,560 million[156]. - Adjusted Operating Income increased by $697 million to $4,424 million, representing an 18.7% change[167]. - Adjusted Operating Income on a constant currency basis rose by $880 million (23.6%) to $4,607 million[167]. Economic and Regulatory Environment - The company anticipates ongoing volatility in future snacks revenue growth due to macroeconomic factors including inflationary pressures and supply constraints[132]. - The U.K. advertising and promotion ban is expected to go into effect in October 2025, but did not significantly impact the company's financial statements for the three and nine months ended September 30, 2023[140]. - Future performance may be affected by macroeconomic conditions, including inflation and geopolitical uncertainties, particularly related to the ongoing situation in Ukraine[220]. - Legal and tax proceedings, including the European Commission investigation, may impact future financial results and operational strategies[222]. Risk Management - The company is exposed to currency exchange rate, commodity price, and interest rate market risks, which are managed through a risk management program[231]. - Fluctuations in currency exchange rates can create volatility in reported results, with a stronger U.S. dollar adversely affecting consolidated earnings and net assets[232]. - The company actively monitors commodity markets, with input costs subject to fluctuations due to various external factors, and employs forward purchase agreements and derivative instruments to manage these costs[233]. - Interest rate movements, including U.S. Treasury rates and corporate credit spreads, are regularly evaluated, and the company uses interest rate swaps to manage its debt structure[234]. Cash Flow and Capital Management - Total debt decreased to $20.0 billion as of September 30, 2023, from $22.9 billion as of December 31, 2022, with a debt-to-capitalization ratio of 0.41[213]. - Net cash provided by operating activities increased to $3,150 million for the nine months ended September 30, 2023, compared to $2,516 million in the prior year[207]. - The company paid dividends of $1,581 million in the first nine months of 2023, up from $1,457 million in the same period of 2022[210]. - The company expects 2023 capital expenditures to be up to $1.2 billion, primarily for modernizing manufacturing facilities and supporting productivity initiatives[208]. Operational Efficiency - The company aims to achieve profitable, long-term growth by focusing on key operating metrics such as Organic Net Revenue, Adjusted Operating Income, and Adjusted EPS[143]. - The company plans to continue focusing on its Simplify to Grow program to enhance operational efficiency and reduce costs[171]. - Adjusted Operating Income was positively impacted by the Simplify to Grow Program, which aims to transform the supply chain network and organizational structure[226].