8-K: Mondelēz Reports Q4 & FY25 Earnings Amid Cocoa Headwinds

Mondelēz International announced its fourth quarter and full year 2025 results, reporting solid top-line growth and strong cash flow, but significant declines in diluted and adjusted EPS due to unprecedented cocoa costs and other factors.

Summary

• Full year 2025 net revenues increased 5.8% to $38.537 billion, with organic net revenue growth of 4.3%.
• Full year 2025 diluted EPS declined 44.7% to $1.89, and adjusted EPS decreased 14.6% on a constant currency basis to $2.92.
• Fourth quarter 2025 net revenues increased 9.3% to $10.496 billion, with organic net revenue growth of 5.1%.
• Fourth quarter 2025 diluted EPS declined 60.8% to $0.51, while adjusted EPS increased 4.6% on a constant currency basis to $0.72.
• Cash provided by operating activities for FY 2025 was $4.5 billion, and free cash flow was $3.2 billion.
• The company returned $4.9 billion to shareholders in cash dividends and share repurchases during FY 2025.
• Unfavorable volume/mix impacted both the full year (-3.7%) and fourth quarter (-4.8%) results.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report with significant profitability challenges overshadowing solid top-line growth and strong cash generation. The substantial decline in EPS and margins, primarily due to cocoa costs, indicates underlying pressure, despite management's confidence in future plans.

Positives

• Delivered solid top-line results with 5.8% net revenue growth and 4.3% organic net revenue growth for FY 2025.
• Generated strong cash flow, with $4.5 billion from operating activities and $3.2 billion in free cash flow for FY 2025.
• Returned significant capital to shareholders, totaling $4.9 billion through dividends and share repurchases in FY 2025.
• Fourth quarter Adjusted EPS increased 4.6% on a constant currency basis, indicating some operational improvement in the latter part of the year.
• Fourth quarter Adjusted Operating Income increased 22.1% on a constant currency basis, driven by higher net pricing, lower advertising and consumer promotion costs, and productivity-driven manufacturing cost reductions.
• Benefited from fewer shares outstanding and favorable currency-related items, which positively impacted Adjusted EPS.

Negatives

• Full year 2025 diluted EPS declined significantly by 44.7% to $1.89.
• Full year 2025 adjusted EPS decreased 14.6% on a constant currency basis to $2.92.
• Unprecedented cocoa cost headwinds significantly impacted profitability.
• Gross profit margin decreased 10.7 percentage points to 28.4% for FY 2025, primarily due to mark-to-market impacts from derivatives and higher raw material costs.
• Operating income margin decreased 8.2 percentage points to 9.2% for FY 2025, affected by mark-to-market impacts, lower Adjusted Operating Income margin, and higher ERP System Implementation costs.
• Unfavorable volume/mix contributed to a 3.7% decline for the full year and a 4.8% decline in the fourth quarter.
• Higher interest and other expenses, increased income taxes, and lower benefit plan non-service income also contributed to the decline in Adjusted EPS.

Risks

• Weakness and/or volatility in macroeconomic conditions, including inflation and financial institution instability.
• Geopolitical, trade, tariff, and regulatory uncertainties affecting developed and emerging markets.
• Volatility of cocoa and other commodity input costs, and the company's ability to effectively hedge these costs.
• Geopolitical uncertainty, including the impact of ongoing or new developments in Ukraine and the Middle East.
• Intense competition, channel shifts, and pricing pressures.
• Weakness in consumer spending and/or changes in consumer preferences and demand.
• Potential disruptions to business operations, such as cyberattacks, supply chain constraints, and labor issues.
• Challenges in realizing the full benefits, cost savings, and synergies from strategic acquisitions and the ERP System Implementation program.
• Impact of climate change on the supply chain and operations.
• Consolidation of retail customers and competition with retailer and other economy brands.
• Changes in currency exchange rates, controls, and restrictions.

Future Outlook

For 2026, Mondelēz International expects Organic Net Revenue growth in the range of flat to 2 percent and Adjusted EPS growth in the range of flat to 5 percent on a constant currency basis. The company also anticipates Free Cash Flow of approximately $3 billion. Currency translation is estimated to increase 2026 net revenue growth by approximately 2.0 percent and Adjusted EPS by $0.06. This outlook is provided amidst greater than usual volatility, including geopolitical, trade, regulatory uncertainty, and commodity prices, and does not account for potential tariff changes to the USMCA.

Management Comments

• "We delivered solid top-line results, generated strong cash flow, and returned significant cash to shareholders in a dynamic and challenging 2025 environment."
• "While unprecedented cocoa cost headwinds impacted our profitability, our teams remained focused on what they can control to best position us for sustainable, profitable growth."
• "As 2026 commences, we are executing clear plans to create multi-year shareholder value through improved volumes, brand investments, structural cost savings and disciplined capital allocation coupled with stabilizing cocoa costs."
• "We remain convinced that our scale across markets—along with our stable of iconic brands, extensive route-to-market capabilities and supply chain strength—give us fundamental advantages in the years to come."

Industry Context

StockSavvy.ai notes that the consumer packaged goods (CPG) industry, particularly in snacking and confectionery, has faced significant input cost inflation, especially for commodities like cocoa. Mondelēz's experience with 'unprecedented cocoa cost headwinds' is reflective of broader industry challenges. While many CPG companies have implemented pricing actions to offset these costs, maintaining volume/mix has been difficult, as evidenced by Mondelēz's declines. The focus on productivity and structural cost savings aligns with industry-wide efforts to protect margins in a high-inflation environment.

Comparison to Industry Standards

• The reported 4.3% organic net revenue growth for FY 2025 is generally in line with or slightly above the mid-single-digit growth seen by some global CPG peers, demonstrating effective pricing strategies.
• The significant decline in diluted EPS (-44.7%) and adjusted EPS (-14.6% constant currency) for FY 2025 is notably worse than many peers who have managed to mitigate profit erosion more effectively, highlighting Mondelēz's particular exposure to cocoa price volatility and other specific operational challenges.
• The $3.2 billion Free Cash Flow for FY 2025 is robust and comparable to the strong cash generation capabilities of other large-cap food and beverage companies, indicating healthy underlying operational cash conversion despite profit pressures.
• The 2026 outlook for flat to 2% organic net revenue growth and flat to 5% adjusted EPS growth is more conservative than some industry leaders who project mid-single-digit top-line growth and higher EPS expansion, suggesting a cautious stance on near-term recovery of profitability.

Legal Proceedings

• The European Commission legal matter regarding alleged infringement of EU competition law was resolved in Q2 2024, with payment obligations fulfilled in August 2024.

Stakeholder Impact

• Shareholders: Experienced a significant decline in diluted and adjusted EPS, but benefited from $4.9 billion in capital returned through dividends and share repurchases.
• Employees: Subject to new restructuring actions initiated in Q4 2025 to reduce cost structure and streamline operations.
• Customers: Faced higher net pricing, which contributed to organic net revenue growth but also to unfavorable volume/mix.
• Suppliers: Impacted by volatility in commodity input costs, particularly cocoa.

Next Steps

• Execute clear plans to create multi-year shareholder value through improved volumes, brand investments, structural cost savings, and disciplined capital allocation.
• Continue with the ERP System Implementation program, with expected completion by year-end 2028.
• Host a conference call for investors at 5 p.m. ET on February 3, 2026, to discuss results and outlook.

Key Dates

Recommendation

While Mondelēz demonstrated solid top-line growth and strong cash flow, the significant decline in full-year diluted and adjusted EPS, coupled with substantial margin compression due to 'unprecedented cocoa cost headwinds,' presents a cautious outlook. The 2026 guidance for modest growth in organic net revenue and adjusted EPS suggests a challenging path to recovery. A seasoned investor would likely 'hold' to observe the effectiveness of the company's plans to mitigate input costs, improve volumes, and restore profitability before making a more definitive investment decision.

Keywords

Mondelēz, MDLZ, Earnings, Q4 2025, FY 2025, Financial Results, Consumer Staples, Snacking, Cocoa Costs, EPS, Revenue, Cash Flow, Outlook 2026