8-K: Mondelz International Reports Q4 and FY 2024 Results; Provides FY25 Outlook

Mondelz International announces its Q4 and full-year 2024 results, highlighting revenue growth and strong cash flow, while providing its FY25 outlook amidst cocoa cost inflation challenges.

Summary

• Mondelz International reported a 1.2% increase in net revenues for FY24, reaching approximately $36.4 billion.
• Organic Net Revenue grew by 4.3%, driven by higher net pricing, although volume/mix was unfavorable at -1.0%.
• Diluted EPS declined by 5.5% to $3.42, while Adjusted EPS on a constant currency basis increased by 13.0% to $3.36.
• The company generated $4.9 billion in cash from operating activities and $3.5 billion in Free Cash Flow.
• Mondelz returned $4.7 billion to shareholders through dividends and share repurchases.
• For Q4 2024, net revenues increased by 3.1%, with Organic Net Revenue growth of 5.2%.
• The company expects approximately 5% Organic Net Revenue growth for 2025.
• Adjusted EPS is expected to decline approximately 10% on a constant currency basis in 2025 due to cocoa cost inflation.
• The company anticipates 2025 Free Cash Flow to be $3+ billion.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company reports revenue growth and strong cash flow, the expected decline in Adjusted EPS due to cocoa cost inflation tempers the overall outlook.

Positives

• Mondelz International delivered balanced top-line growth, strong earnings, and robust free cash flow generation in fiscal year 2024.
• The company returned significant capital to shareholders, amounting to $4.7 billion.
• Organic Net Revenue showed a growth of 4.3% for the full year.
• The company acquired Evirth (Shanghai) Industrial Co., Ltd. which added incremental net revenues of $72 million during the three months and twelve months ended December 31, 2024 and operating income of $10 million during the three months and twelve months ended December 31, 2024.

Negatives

• FY24 Diluted EPS declined by 5.5% to $3.42.
• The company expects Adjusted EPS to decline approximately 10% on a constant currency basis in 2025 due to unprecedented cocoa cost inflation.
• Volume/mix was unfavorable at -1.0% for FY24.
• Adjusted Gross Profit margin decreased 650 basis points to 31.5 percent due primarily to higher raw material and transportation costs.

Risks

• The company faces unprecedented cocoa cost inflation, which is expected to negatively impact Adjusted EPS in 2025.
• Currency translation is estimated to decrease 2025 net revenue growth by approximately 2.5 percent with a negative $0.12 impact to Adjusted EPS.
• The outlook is provided in the context of greater than usual volatility, including due to geopolitical, trade and regulatory uncertainty and commodity prices.
• Weakness in macroeconomic conditions in our markets, including as a result of inflation (and related monetary policy actions by governments in response to inflation) and the instability of certain financial institutions.
• Geopolitical uncertainty, including the impact of ongoing or new developments in Ukraine and the Middle East, related current and future sanctions imposed by governments and other authorities and related impacts, including on our business operations, employees, reputation, brands, financial condition and results of operations.

Future Outlook

The company expects approximately 5% Organic Net Revenue growth for 2025 and Adjusted EPS to decline approximately 10% on a constant currency basis due to cocoa cost inflation; 2025 Free Cash Flow of $3+ billion is anticipated.

Management Comments

• Dirk Van de Put, Chair and Chief Executive Officer, stated that fiscal 2024 was another strong year of performance.
• Dirk Van de Put, Chair and Chief Executive Officer, stated that the company remains focused on executing against its long-term growth strategy and delivering on its chocolate business playbook to navigate unprecedented cocoa cost inflation.
• Dirk Van de Put, Chair and Chief Executive Officer, stated that the company's teams are well-equipped to stay agile and take the necessary actions to navigate this challenging operating environment.
• Dirk Van de Put, Chair and Chief Executive Officer, stated that the company believes it is solidly positioned for attractive long-term topand bottom-line growth.

Industry Context

The announcement reflects the ongoing challenges in the food industry related to commodity cost inflation, particularly cocoa, and the strategies companies are employing to mitigate these impacts while maintaining growth and shareholder value. Competitors in the snacking and confectionery space are likely facing similar pressures and implementing comparable strategies.

Comparison to Industry Standards

• Nestle, a major competitor in the food and beverage industry, has also been navigating similar inflationary pressures and supply chain challenges.
• Companies like Hershey's and Mars, which focus on chocolate and confectionery, are directly impacted by cocoa price volatility.
• Mondelz's organic revenue growth of 4.3% is comparable to the growth rates of other major players in the packaged foods industry, which have seen a mix of pricing and volume impacts.
• The company's focus on cost management and productivity improvements aligns with industry-wide efforts to offset rising input costs.

Stakeholder Impact

• Shareholders will see continued capital returns but may be concerned about the projected EPS decline.
• Employees may face pressure related to cost management initiatives.
• Customers may experience price increases due to higher input costs.
• Suppliers, particularly cocoa suppliers, will be impacted by the company's efforts to manage costs.

Next Steps

• The company will host a conference call for investors to review its results.

Key Dates