10-K: Mondelēz International Reports Strong 2023 Results Driven by Pricing and Volume Growth

Mondelēz International's 2023 annual report reveals a significant increase in net revenues and earnings, driven by strategic pricing actions and volume growth across its global snacking portfolio.

Summary

• Mondelēz International reported a 14.4% increase in net revenues, reaching $36.0 billion in 2023, compared to $31.5 billion in 2022.
• Organic Net Revenue, a non-GAAP measure, grew by 14.7% to $35.6 billion, indicating strong underlying business performance.
• Net earnings attributable to Mondelēz International increased by 82.5% to $4.959 billion in 2023, up from $2.717 billion in 2022.
• Diluted earnings per share (EPS) rose by 84.7% to $3.62 in 2023, compared to $1.96 in the previous year.
• Adjusted EPS, a non-GAAP measure, increased by 14.3% to $3.19 in 2023, and by 19.0% on a constant currency basis to $3.32.
• The company's growth was fueled by higher net pricing and favorable volume/mix across most regions, particularly in emerging markets.
• The company completed the sale of its developed market gum business in 2023, which impacted net revenues.
• The company's strategic priorities include accelerating consumer-centric growth, driving operational excellence, building a winning growth culture, and scaling sustainable snacking.

Sentiment

Score: 8

Explanation: The document presents a strong financial performance with significant growth in revenue and earnings, coupled with strategic initiatives for future growth and sustainability. However, it also acknowledges risks and challenges, resulting in a positive but not overly optimistic sentiment.

Positives

• Strong revenue growth driven by effective pricing strategies and increased demand for snack products.
• Significant increase in net earnings and diluted EPS, indicating improved profitability.
• Positive performance in both emerging and developed markets, showcasing a balanced global presence.
• Successful execution of strategic priorities, including consumer-centric growth and operational excellence.
• The company is focused on sustainable sourcing, reducing environmental impact, and promoting mindful snacking.

Negatives

• Unfavorable currency translation had a significant negative impact on reported net revenues and earnings.
• The divestiture of the developed market gum business resulted in a reduction in net revenues.
• The company experienced higher operating costs, including increased raw material, labor, and energy costs.
• The war in Ukraine continues to impact business operations and financial performance.

Risks

• Volatility in commodity and other input prices, including cocoa, dairy, and wheat, could impact profitability.
• Geopolitical uncertainty, including the war in Ukraine and developments in the Middle East, could disrupt operations and supply chains.
• Intense competition in the food and snacking industry could affect pricing and market share.
• Failure to adapt to changing consumer preferences and demand could negatively impact sales.
• Cybersecurity breaches and disruptions to information technology systems pose a risk to operations and data security.
• Climate change may adversely impact the supply chain and operations.
• The company may not successfully identify, complete, or manage strategic transactions.

Future Outlook

The company aims to be the global leader in snacking by focusing on growth, execution, culture, and sustainability, with a strategic plan to drive long-term topand bottom-line growth.

Management Comments

• The company aims to deliver a broad range of delicious, high-quality snacks that nourish life's moments, made with sustainable ingredients and packaging that consumers can feel good about.
• The company is committed to helping to drive longstanding, enduring, positive change in the world.
• The company's strategic plan builds on strong foundations, including leadership in attractive categories, an attractive global footprint, a strong core of iconic global and local brands, marketing, sales, distribution and cost excellence capabilities, and top talent with a growth mindset.

Industry Context

The report highlights Mondelēz's position in the highly competitive global snacking industry, where it faces competition from global, regional, and local players, including new start-up brands and retailers with their own private label products. The company's focus on innovation, digital commerce, and sustainability reflects broader industry trends.

Comparison to Industry Standards

• Mondelēz's performance is compared against a peer group including Campbell Soup Company, The Coca-Cola Company, Colgate-Palmolive Company, Danone S.A., General Mills, Inc., The Hershey Company, Kellanova (formerly Kellogg Company), The Kraft Heinz Company, Nestl S.A., PepsiCo, Inc., The Procter & Gamble Company and Unilever PLC.
• The company's cumulative total return over the past five years was $202.16, compared to $207.21 for the S&P 500 and $154.04 for the peer group index.
• The company's focus on organic growth and adjusted EPS aligns with industry standards for measuring performance.
• The company's strategic acquisitions, such as Ricolino, Clif Bar, and Chipita, are consistent with industry trends of consolidation and expansion into high-growth categories.
• The company's emphasis on sustainability and mindful snacking reflects growing consumer and investor interest in ESG factors.

Management Changes

Legal Proceedings

• The company is involved in various legal proceedings, including a class action lawsuit related to the trading of wheat futures contracts and an investigation by the European Commission regarding alleged anti-competitive practices.
• The company has reached a settlement with the CFTC regarding the wheat futures trading allegations, but the class action lawsuit is ongoing.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and increased earnings per share.
• Employees will benefit from the company's focus on talent management and development, as well as competitive compensation and benefits.
• Customers will benefit from the company's commitment to providing high-quality, innovative products.
• Suppliers will benefit from the company's focus on sustainable sourcing and long-term partnerships.
• Creditors will benefit from the company's strong financial position and ability to meet its obligations.

Next Steps

• The company will continue to focus on its four strategic priorities: accelerating consumer-centric growth, driving operational excellence, building a winning growth culture, and scaling sustainable snacking.
• The company will continue to evaluate potential strategic transactions, including acquisitions, divestitures, and joint ventures.
• The company will continue to invest in its brands, innovation, and digital capabilities.
• The company will continue to monitor and manage risks related to commodity prices, geopolitical uncertainty, and cybersecurity.

Key Dates

Keywords

snacking, chocolate, biscuits, baked snacks, revenue growth, earnings, organic net revenue, adjusted EPS, emerging markets, developed markets, sustainability, acquisitions, divestitures, pricing, volume, supply chain, commodities