8-K: Mondelz International Reports Q1 2025 Results: Revenue Up Slightly, EPS Declines Amid Cocoa Cost Inflation

Mondelz International's Q1 2025 results show a slight increase in net revenues but a significant decline in diluted EPS, primarily due to unprecedented cocoa cost inflation.

Summary

• Mondelz International reported its first quarter 2025 results on April 29, 2025.
• Net revenues increased by 0.2% to $9.313 billion, while organic net revenue grew by 3.1%.
• Volume/mix decreased by 3.5%.
• Diluted EPS declined by 70.2% to $0.31, and adjusted EPS decreased by 18.3% on a constant currency basis to $0.74.
• Cash provided by operating activities was $1.1 billion, and free cash flow was $0.8 billion.
• The company returned $2.1 billion to shareholders through cash dividends and share repurchases.
• For 2025, Mondelz reaffirms organic net revenue growth of approximately 5% and expects adjusted EPS to decline approximately 10% on a constant currency basis due to unprecedented cocoa cost inflation.
• The company expects 2025 free cash flow of $3+ billion.

Sentiment

Score: 5

Explanation: The sentiment is neutral; while revenue is slightly up, earnings are down significantly due to cost pressures; the company is maintaining its revenue outlook but lowering EPS expectations, indicating a mixed outlook.

Positives

• Organic net revenue grew by 3.1%, indicating underlying strength in the company's core business.
• The company returned a substantial $2.1 billion to shareholders.
• Mondelz reaffirmed its organic net revenue growth outlook of approximately 5% for 2025.
• Free cash flow is expected to be $3+ billion for 2025.

Negatives

• Diluted EPS decreased significantly by 70.2% to $0.31.
• Adjusted EPS declined by 18.3% on a constant currency basis.
• Gross profit margin decreased by 2,500 basis points to 26.1%.
• The company expects adjusted EPS to decline approximately 10% on a constant currency basis for 2025.

Risks

• Unprecedented cocoa cost inflation is expected to negatively impact adjusted EPS in 2025.
• The outlook is provided in the context of greater than usual volatility, including geopolitical, trade, regulatory uncertainty, and commodity prices.
• Weakness in macroeconomic conditions, including inflation, could impact performance.
• Geopolitical uncertainty, including the impact of the war in Ukraine and the Middle East, poses risks to the business.

Future Outlook

Mondelz International reaffirms its 2025 outlook for organic net revenue growth of approximately 5% and expects adjusted EPS to decline approximately 10% on a constant currency basis due to unprecedented cocoa cost inflation; the company also expects 2025 free cash flow of $3+ billion.

Management Comments

• Dirk Van de Put, Chair and Chief Executive Officer, stated that the company delivered solid Q1 2025 results in line with expectations, driven by strong execution of their growth strategy while navigating unprecedented cocoa cost inflation.
• He also expressed confidence in the full-year outlook due to Q1 pricing and share performance, along with the global strength of their categories.
• Management remains committed to delivering against their strategic agenda and staying agile in a volatile operating environment to drive sustainable shareholder value.

Industry Context

Mondelz's results reflect the broader challenges faced by the food industry, including commodity cost inflation (particularly cocoa) and macroeconomic uncertainty; the company's focus on pricing and strategic acquisitions aligns with industry trends to mitigate these challenges and drive growth.

Comparison to Industry Standards

• Nestle, a major competitor, has also been navigating similar inflationary pressures, focusing on pricing and portfolio optimization.
• Companies like Hershey have also reported challenges related to cocoa costs, indicating this is an industry-wide issue.
• Mondelz's organic revenue growth of 3.1% is comparable to some peers, but the EPS decline is more pronounced, likely due to the specific impact of cocoa costs on their product portfolio.

Stakeholder Impact

• Shareholders will see a lower EPS, but the company is still returning capital through dividends and share repurchases.
• Employees may face uncertainty due to cost-cutting measures to offset inflation.
• Customers may experience higher prices due to pricing actions taken to offset cost increases.
• Suppliers may face pressure to reduce costs.

Next Steps

• Mondelz International will host a conference call for investors to review its results.
• The company will continue to execute its growth strategy and navigate the volatile operating environment.
• The ERP System Implementation program will be implemented in several phases over the next four years, with expected completion by year-end 2028.

Key Dates

Keywords

Mondelz International, Q1 2025, Earnings, Revenue, EPS, Cocoa Inflation, Snacks, Financial Results