Mondelez Stock (NASDAQ:MDLZ)
Mondelez International, Inc. (NASDAQ:MDLZ) stock rose more than 1% with the release of impressive fourth-quarter 2022 results. The top and bottom lines grew year over year and above the consensus estimate.
Results from its snacking products’ stability, brand strength, broad-based growth across geographies, categories, and brands, ongoing strength in emerging and developed countries, and gains from recent acquisitions.
Mondelez stock has risen 5.8% in the last three months, outperforming the industry’s 0.1% rise.
Mondelez announced the sale of its developed market gum business to Perfetti Van Melle during the quarter. This move will help it fund recent acquisitions and reorganize its portfolio. It also aims to sell the Halls company soon.
Key Results
Adjusted earnings per share were 73 cents, up 2.8% year on year and 9.9% in constant currency (cc). The figure outperformed the Consensus Estimate of 71 cents per share. The year-over-year increase was supported by lower outstanding shares and solid operating gains. This was somewhat offset by higher taxes, higher interest expenditures, and lower income from equity method investments.
Net revenues increased 13.5% to $8,695 million, exceeding the $8,373 million consensus estimate. The rise was driven by 15.4% organic net revenue growth and increased sales from the Chipita, Clif Bar, and Ricolino acquisitions, which were partially offset by currency challenges. Organic net revenues were boosted by favorable volumes and pricing.
Revenue from emerging markets climbed by 23.3% to $3,320 million, while organic revenue increased by 24.7%. Revenues from developed markets increased 8.2% to $5,375 million, while organic revenue increased 10.5%.
Revenues rose 43.2%, 1.3%, 2.9%, and 28.3% year on year in Latin America, Asia, the Middle East, and Africa, Europe, and North America, respectively. Organic revenue growth in the aforementioned regions was 37.1%, 13.6%, 8.7%, and 19.5%, respectively.
At cc, the adjusted gross profit increased to $473 million. Due to higher raw material and transportation costs, as well as an unfavorable mix, the adjusted gross profit margin shrank by 120 basis points (bps) to 36%. These were largely offset by competitive prices.
At cc, Mondelez’s adjusted operating income increased by $201 million. The adjusted operating income margin shrank by 30 basis points to 15% as a result of higher input prices and an unfavorable mix, which were mainly offset by SG&A leverage and advantageous pricing.
Other Financial Information
The company concluded the quarter with $1,923 million in cash and cash equivalents, $20,251 million in long-term debt, and $26,920 million in total equity. As of December 31, 2022, Mondelez generated $3,908 million in net cash from operational activities. For the same time period, free cash flow was $3 billion. For 2023, management anticipates a free cash flow of more than $3.3 billion.
In the form of cash dividends and share repurchases, the business returned $700 million to shareholders. Mondelez’s board of directors approved a share authorization program for up to $6 billion in Class A common stock, which is valid until December 31, 2025.
Guidance
Management gave optimistic guidance for 2023, citing good quarterly performance and ongoing strength in the snacking industry. Mondelez anticipates organic net revenue growth of 5-7% in 2023. At cc, the company anticipates a high single-digit increase in adjusted earnings per share, or EPS. Currency fluctuations are expected to reduce net revenues by 1% and adjusted EPS by 4 cents in 2023. The adjusted effective tax rate is expected to be in the low to mid-twenties.
Mondelez, on the other hand, anticipates another year of double-digit inflation due to sustained high costs in packaging, energy, materials, and labor. Higher operational income and benefits from the Clif and Ricolino acquisitions are also expected to benefit the company. Fewer profits are expected in the first quarter of 2023 due to lower volumes in Europe. Europe is anticipated to be dismal again in the second quarter.
Featured Image: Freepik
