Mondelez Q4 Earnings Miss Estimates Amid Increased Cocoa Costs

Core Insights - Mondelez International, Inc. (MDLZ) reported fourth-quarter 2024 results with net revenues increasing year over year but missing the Zacks Consensus Estimate, while adjusted earnings per share (EPS) decreased and also fell short of expectations due to a challenging operating environment marked by cocoa cost inflation [1][2][13] Financial Performance - Adjusted EPS was 65 cents, down 15.9% on a constant-currency basis, missing the Zacks Consensus Estimate of 66 cents, primarily due to decreased operating results and lower equity method investment earnings [2] - Net revenues rose 3.1% year over year to $9,604 million, driven by effective pricing strategies and positive volume/mix growth, but fell short of the Zacks Consensus Estimate of $9,691.7 million [3] - Organic net revenues grew 5.2% year over year, supported by a 5.1 percentage point increase in pricing and a favorable volume/mix impact of 0.1 percentage point [4] Market Segmentation - Revenues from emerging markets increased 1.7% to $3,640 million, with a 6.7% organic growth, driven by favorable pricing actions and volume/mix [5] - Revenues from developed markets rose 4% to $5,964 million, reflecting solid growth from Europe and the U.S., with organic growth of 4.3% [6] - Region-wise, revenues in Latin America dropped 7.2%, while Asia, the Middle East & Africa, and Europe grew 9.9% and 5.8%, respectively [7] Profitability Metrics - Adjusted gross profit fell by $440 million on a constant-currency basis, with the adjusted gross profit margin contracting by 650 basis points to 31.5%, mainly due to increased raw material and transportation costs [8] - Adjusted operating income declined by $396 million on a constant-currency basis, with the adjusted operating income margin contracting 510 basis points to 10% due to escalated input cost inflation [9] Financial Health - The company ended the quarter with cash and cash equivalents of $1,351 million, long-term debt of $15,664 million, and total equity of $26,958 million, generating $4,910 million of net cash from operating activities for the 12 months ended December 31, 2024 [11] - Adjusted free cash flow was $3,523 million for the same period, with management expecting free cash flow of over $3 billion for 2025 [11] Future Outlook - Mondelez projects organic net revenue growth of around 5% in 2025, but adjusted EPS is expected to decline by nearly 10% on a constant-currency basis due to unprecedented cocoa cost inflation [13] - The company anticipates a double-digit increase in inflation for 2025, primarily driven by cocoa costs and some labor expenses, with interest expense expected to be nearly $350 million [14]