Business
Mondelez beats quarterly results on rebound in demand, higher prices
Global Banking & Finance Review®
Company
By Anuja Bharat Mistry
(Reuters) -Mondelez International on Tuesday beat third-quarter revenue and profit estimates, as the Cadbury parent’s efforts to provide its products at different price points drove a sequential improvement in sales volumes.
Demand for the company’s products held steady, as the prices of its candies and biscuits ranging from $3 to $4 helped in appealing to customers, who have been going for cheaper alternatives.
Its quarterly volumes rose 0.3 percentage point, while prices were up 5.1 percentage points.
A rebound in demand in the regions including Europe, North America as well as China helped the Toblerone maker overcome dipping volumes in Latin America.
Mondelez echoed recovery in volumes as its peer General Mills, which saw demand improve in certain categories.
Easing prices of gasoline and an uptick in job growth in the United States have been encouraging consumers to spend on discretionary items, including food and apparel.
“Consumers are continuing to embrace chocolate and biscuits as everyday indulgence” said CEO Dirk Van de Put, adding that consumers have remained loyal to their favorite brand.
“The strength of the Mondelez brands suggests that private label products will have trouble making meaningful inroads into the company’s market share,” said Dave Novosel, analyst with Gimme Credit.
Benefits from lower manufacturing costs and higher product prices further helped Mondelez in expanding its adjusted gross profit margin by 230 basis points to 40.5%.
Shares of the company, which maintained its annual forecasts, were volatile after rising about 2% after the bell.
The company’s quarterly net revenue of $9.20 billion beat analysts’ average estimates of $9.11 billion, according to data compiled by LSEG.
Its adjusted profit of 99 cents per share in the quarter ended Sept. 30, topped estimates of 85 cents per share.
Mondelez also said that it has agreed to acquire a majority stake in Evirth, a manufacturer of cakes and pastries in China.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shailesh Kuber)
Gross profit margin is a financial metric that shows the percentage of revenue that exceeds the cost of goods sold. It indicates how efficiently a company uses its resources to produce goods.
Sales volumes refer to the quantity of products sold by a company during a specific period. It is a key indicator of a company's performance and market demand.
Brand loyalty is the tendency of consumers to continue buying the same brand's products over time, often due to positive experiences and perceived value.
Adjusted profit is a financial measure that excludes certain one-time expenses or income to provide a clearer view of a company's ongoing profitability.
Market share is the portion of a market controlled by a particular company or product, expressed as a percentage of total sales in that market.
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