16 July 2024
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Global Industry

Mondelēz International: Reports Q3-2018 Results

Deerfield / IL. (mdlz) Mondelez International reported its third quarter 2018 results.

  • Net revenues declined 3.7 percent driven by currency; Organic Net Revenue1 grew 1.2 percent, which includes 60 basis points of headwinds for malware effects in the prior year
  • Operating income margin was 11.7 percent, down 620 basis points; Adjusted Operating Income1 margin was 17.1 percent, up 40 basis points
  • Diluted EPS was USD 0.81, up 27 percent; Adjusted EPS1 was USD 0.62, up 18 percent on a constant-currency basis
  • Vinzenz Gruber to become EVP and President, Europe, following retirement of Hubert Weber on January 31

«We performed well in the third quarter,» said Dirk Van de Put, Chairman and CEO. «We continue to see good momentum in emerging markets, underpinned by solid volume growth and strong execution. We are beginning to deliver against our new long-term growth strategy by implementing a more agile innovation model and establishing a new commercial structure that will improve our consumer focus and drive greater local accountability, while igniting our global and local brand and innovation agendas.»

Net Revenue

USD in millions Reported Net Revenues Organic Net Revenue Growth
Q3 2018 Change Q3 2018 Vol/Mix Pricing
Third Quarter
Latin America USD 774 (14.8 ) % 4.6 % (0.6 ) pp 5.2 pp
Asia, Middle East + Africa 1,398 (0.5 ) 4.6 3.1 1.5
Europe 2,361 (3.3 ) 0.2 (0.3 ) 0.5
North America 1,755 (1.1 ) (2.0 ) (3.2 ) 1.2
Mondelēz International USD 6,288 (3.7 ) % 1.2 % (0.4 ) pp 1.6 pp
Emerging Markets USD 2,325 (4.9 ) % 6.0 %
Developed Markets USD 3,963 (3.0 ) % (1.7 ) %
September Year-to-Date Sept YTD Sept YTD
Latin America USD 2,439 (8.5 ) % 3.5 % (2.3 ) pp 5.8 pp
Asia, Middle East + Africa 4,300 0.2 3.3 1.5 1.8
Europe 7,370 5.6 2.5 2.8 (0.3 )
North America 5,056 1.2 0.5 – 0.5
Mondelēz International USD 19,165 1.2 % 2.3 % 1.1 pp 1.2 pp
Emerging Markets USD 7,218 1.0 % 5.4 %
Developed Markets USD 11,947 1.4 % 0.3 %

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Operating Income and Diluted EPS

USD in millions Reported Adjusted
Q3 2018 vs PY (Rpt Fx) Q3 2018 vs PY (Rpt Fx) vs PY (Cst Fx)
Quarter 3
Gross Profit USD 2,414 (5.3 ) % USD 2,553 (0.8 ) % 4.1 %
Gross Profit Margin 38.4 % (0.6 ) pp 40.6 % 1.1 pp
Operating Income USD 737 (37.1 ) % USD 1,074 (1.4 ) % 4.1 %
Operating Income Margin 11.7 % (6.2 ) pp 17.1 % 0.4 pp
Net Earnings2 USD 1,194 21.7 % USD 924 7.7 % 14.2 %
Diluted EPS USD 0.81 26.6 % USD 0.62 10.7 % 17.9 %
September Year-to-Date Sept YTD Sept YTD
Gross Profit USD 7,803 5.7 % USD 7,691 3.1 % 2.7 %
Gross Profit Margin 40.7 % 1.7 pp 40.1 % 0.1 pp
Operating Income USD 2,442 (7.2 ) % USD 3,225 6.5 % 5.9 %
Operating Income Margin 12.7 % (1.2 ) pp 16.8 % 0.6 pp
Net Earnings USD 2,558 19.9 % USD 2,686 10.9 % 9.7 %
Diluted EPS USD 1.72 23.7 % USD 1.80 13.9 % 12.7 %

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Third Quarter Commentary

  • Net revenues declined 3.7 percent, driven by the impact of currency. Organic Net Revenue increased 1.2 percent, partially tempered by lapping last year’s malware recovery benefit.
  • Gross profit margin was 38.4 percent, down 60 basis points driven primarily by an unfavorable impact from currency and commodity hedging activities. Adjusted Gross Profit margin was 40.6 percent, an increase of 110 basis points, driven by higher pricing and productivity savings.
  • Operating income margin was 11.7 percent, down 620 basis points, due to the prior-year gain on a divestiture and the prior-year benefit of an indirect tax matter, as well as unfavorable current year impacts from currency and commodity hedging activities. These items were partially offset by lower restructuring program costs and the lapping of prior year malware-related expenses. Adjusted Operating Income margin increased 40 basis points to 17.1 percent due to pricing and productivity savings partially offset by other income and expense items.
  • Diluted EPS was USD 0.81, up 27 percent, driven by the gain on equity method investment transaction partially offset by the unfavorable impact from currency and commodity hedging activities and the lapping of the prior-year gain on divestitures and the prior-year benefit from the resolution of indirect tax matters.
  • Adjusted EPS was USD 0.62 and grew 18 percent on a constant-currency basis, driven primarily by favorability in taxes, operating gains and fewer shares outstanding.
  • Capital Return: The company returned approximately USD 800 million to shareholders in common stock repurchases and cash dividends. Year to date, the company has returned approximately USD 2.6 billion to shareholders.

2018 Outlook

Mondelēz International provides guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange. Refer to the Outlook section in the discussion of non-GAAP financial measures below for more details. The company now expects full year 2018 Organic Net Revenue growth to be approximately 2 percent. The company maintains its outlook for Adjusted Operating Income margin of approximately 17 percent and double-digit Adjusted EPS growth on a constant-currency basis. The company estimates currency translation would decrease net revenue growth by approximately 1 percent3 with a negative USD 0.02 impact to Adjusted EPS3. In addition, the company continues to expect Free Cash Flow1 of approximately USD 2.8 billion.

Leadership Change

Vinzenz Gruber, currently President, Western Europe, will become EVP and President, Europe, succeeding Hubert Weber, EVP and President, Europe upon his retirement on January 31, 2019. Gruber brings extensive marketing and commercial experience, both at Mondelēz International and other leading consumer goods companies. Weber is retiring after 29 years of service with the company. Weber has led the European business since 2013, navigating a period of significant transformation and delivering strong business results and creating a robust platform for future growth.


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