Mondelez

Mondelez’s CEO boasted that the company seeing sales increase even as it hiked prices

Mondelez’s CEO boasted of 12% revenue growth thanks in part to “strong pricing” and “resilient demand for our brands.” “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Turning to Slide 5. You can see that our strategy is continuing to drive a virtuous cycle. We are well positioned to deliver a strong full year ’22 performance and long-term revenue growth. This quarter, our revenue growth was 12.1%, which means 11.2% growth year-to-date. The revenue was generated through continued volume growth as well as strong pricing necessary because of ongoing cost inflation, and it demonstrates the resilient demand for our brands. That revenue growth is fueling our gross profit, which is growing 12.8% for the quarter and 10.8% year-to-date.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez CEO: “Volume remained solid relative to much of the sectors as consumers continue to choose our trusted and beloved brands even as we implement necessary pricing.”“DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: As you can see on Slide 6, we delivered 12.1% organic net revenue growth in Q3. Volume remained solid relative to much of the sectors as consumers continue to choose our trusted and beloved brands even as we implement necessary pricing. We view our performance in the third quarter and year-to-date as further evidence that our long-term strategy continues to pay off. Since the launch of our new growth plan in 2018, we have consistently over-delivered on net revenue growth through a virtuous cycle of increasing investment, strong local execution and targeted incentives. We remain confident that this strategy will continue to deliver attractive growth in the quarters and years to come.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez told analysts that “year-to-date, we have delivered nearly $900 million in absolute gross profit dollar growth, a record high for our business.” “LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: Now turning to Page 15. In Q3, we posted gross profit dollar growth of plus 13% and plus 10% for EBIT. Year-to-date, we have delivered nearly $900 million in absolute gross profit dollar growth, a record high for our business. This dollar growth enables us to continue investing in brand-building to drive our virtuous cycle of growth. Although organic top line and profit dollar growth are key focus areas, cost excellence remains an important part of our DNA and an enabler in this environment. To that end, we continue to make good progress around digitizing the enterprise and realizing efficiencies, reducing nonessential overhead spend and driving simplification.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez told analysts it benefited from price hikes in both North America and Europe

Mondelez’s CFO: “North America grew 12% in Q3, driven by higher pricing in biscuits, strong candy growth and robust increases from our ventures businesses, particularly Tate’s and Give & Go.” “LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: North America grew 12% in Q3, driven by higher pricing in biscuits, strong candy growth and robust increases from our ventures businesses, particularly Tate’s and Give & Go. Volume/mix was roughly flat. North America OI increased by more than 20% during the quarter due to higher pricing that was implemented in Q2 as well as some benefits related to the factory closings last year and the addition of Clif. AMEA grew 14.6% for the quarter with strong volume/mix growth of 8.5 points and broad-based growth across all of our business units in the region.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez said that in Europe especially the company was benefitting from consumers spending less money on dining out and entertainment. “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Looking forward to the Christmas season, the majority of European consumers say they plan to spend the same amount over the holidays, if not more, as in 2021. They also say they plan to spend more money at home and on gifting with less money spent on dining out and entertainment. These category dynamics combined with the enduring strength of our trusted and beloved brands give us confidence that we will continue to successfully navigate inflationary periods like today.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez said the company was expecting “margin recovery” for Europe thanks to conclusions of pricing negotiations. “LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: Turning to regional performance on Slide 16. Europe grew 5.2% during the quarter. This includes nearly 5 points of volume/mix decline entirely linked to customer disruptions from a round of pricing negotiations during Q3. Importantly, as I already said, we have successfully implemented virtually all of the price planned. We continue to support our brands with meaningful investments in the region to ensure consumers stay loyal to our categories and franchises. OI dollar for the quarter declined by 7.4%, driven by customer volume disruption and ongoing commodity pressure. Now that pricing has been implemented, we expect margin recovery for Europe in Q4.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez used those price hikes to spend over $3 billion on stock buybacks and dividends for investors

Mondelez told analysts the company returned “ $3.3 billion to shareholders year-to-date through share repurchases and dividends.” “LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: Turning to Slide 18. We remain focused on generating strong free cash flow. Year-to-date, we have generated $1.9 billion, including a onetime expense of $300 million related to the Clif acquisition and buyout of the non-vested employee stock ownership plan. This was part of the originally disclosed purchase price, but as it relates to the ease up for employees and deemed compensation, it is reflected in cash flow. This strong free cash flow performance has enabled us to return $3.3 billion to shareholders year-to-date through share repurchases and dividends.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez stressed more price hikes were coming even if input prices declined

Mondelez’s CEO told analysts “ we have announced further pricing actions across numerous markets across the globe, including the United States, which takes effect in December ’22, and we are preparing for ’23 negotiations in other markets.”“DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Additionally, we have announced further pricing actions across numerous markets across the globe, including the United States, which takes effect in December ’22, and we are preparing for ’23 negotiations in other markets. We also continue to take appropriate action to hedge our commodity costs with greater flexibility while continuing to advance our ongoing productivity initiatives.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CFO: “We also expect a significant contribution from pricing, and we continue to plan for double-digit cost inflation.”“LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: We continue to expect broad-based growth in our core categories and markets. We also expect a significant contribution from pricing, and we continue to plan for double-digit cost inflation. We have just announced another round of pricing in the U.S. to reflect continued inflation and positive impact of our commodities coverage in 2022 seizing current spot levels in 2023. While we successfully concluded our European pricing with disruption below our anticipated levels, inflation continues to be a concern in Europe, particularly with energy, that despite some EU-driven measures is still a significant headwind.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CEO: “On pricing, where we stand is that we’ve just gone through our second round of pricing this year in Europe. We’ve announced a third round of pricing in the U.S., which will take effect in December.” “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: I think we also are benefiting from the fact that we have strong brands in which we continue to invest quite significantly. That’s part of our thinking, and I think that is helping us in our results. Pricing, of course, played a role. On pricing, where we stand is that we’ve just gone through our second round of pricing this year in Europe. We’ve announced a third round of pricing in the U.S., which will take effect in December. And we are starting our negotiations in Europe for the typical beginning of the year 2023 pricing round.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CEO said that while “we’ve seen some commodities showing signs of pulling back but we still expect significant inflation in ’23 and hence, the pricing rounds we have to go through.” “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: From an elasticity perspective, maybe I would say that, that remains below expectations. It is lower than it was last year even, certainly lower than it was pre COVID. In our forecast, we are foreseeing higher elasticity effects because we believe that eventually, there will be a bigger effect, but so far, we’re not quite seeing that. And then from a cost perspective, we’ve seen some commodities showing signs of pulling back but we still expect significant inflation in ’23 and hence, the pricing rounds we have to go through.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CFO: “ reality is pricing for more than 50% has already been taken or announced. And so as a matter of pricing for next year, you have to think about carryover of announced pricing being for more than 50% done.” “LUCA ZARAMELLA, EXECUTIVE VP & CFO, MONDELEZ INTERNATIONAL, INC.: Look, reality is pricing for more than 50% has already been taken or announced. And so as a matter of pricing for next year, you have to think about carryover of announced pricing being for more than 50% done. Obviously, as we said, there is the U.S. coming as of December, and that will add to the 50%.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CEO: “ The good news about the third round of pricing in the U.S. is that it’s been announced and it’s been accepted by the clients…So we have good confidence that this price increase will go through.“DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Your assumption is right. It’s a combination of everything you said. So our approach to pricing is that the additional costs we see every year, which could be from a commodity perspective, packaging, labor, transportation, we are trying to price away. So we do have a number of hedges that are coming off. We are careful on the hedging for next year because it could, to our opinion, go both ways. Prices could — or cost could still go up. We want to hedge the right way against that, but we also need to be careful that commodity costs don’t come down and that we can benefit from that. And so the short answer to what you said, it’s all of the above. The good news about the third round of pricing in the U.S. is that it’s been announced and it’s been accepted by the clients. We will see how the consumer reacts, but so far, the 2 previous price increases, we have not seen a major impact on consumer offtake and penetration and frequency; [volume growth] and so on is all still very strong. So we have good confidence that this price increase will go through. And then we should be okay unless something happens in our cost picture.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez: “Chocolate is highly desired. We see more and more signs that consumers are saying it’s the snack they cannot live without.”

Mondelez’s CEO: “ Chocolate is highly desired. We see more and more signs that consumers are saying it’s the snack they cannot live without.” DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Chocolate is highly desired. We see more and more signs that consumers are saying it’s the snack they cannot live without. And so I would say, concern, short term from consumers, relatively optimistic and they keep on buying our categories, which is reflected in the numbers that you saw, which includes, as I said before, some client disruption. I hope this gives you an idea, Bryan.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CEO: “ We see signs that consumers really want to continue to consume chocolates and biscuits. I think our pricing execution is now really coming through.” “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Yes, yes. Thank you, Bryan. Well, first, on the results, I would say we have a very strong top line performance, which I think is a testimony to the resilience of our categories, which is important to take into account. We see signs that consumers really want to continue to consume chocolates and biscuits. I think our pricing execution is now really coming through. And on top of all that, we have volume growth, which is quite unique in today’s world.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)

Mondelez’s CEO: “We see more and more signs that consumers continue to see or increasingly see our categories as an affordable indulgence. We see consumers saying that chocolate is really something they cannot live without.” “DIRK VAN DE PUT, CHAIRMAN & CEO, MONDELEZ INTERNATIONAL, INC.: Of course, developed markets, we see a very mixed picture, challenged in Europe, as we all know, relatively optimistic in the U.S. In the middle of all that, as I already said, our categories, we expect to continue a strong buy. We see more and more signs that consumers continue to see or increasingly see our categories as an affordable indulgence. We see consumers saying that chocolate is really something they cannot live without. And so we believe that the spending decrease that we will see from consumers eventually, as inflation keeps hitting them, is going to be probably more in the big ticket items. Grocery seems to be doing overall pretty well, I would say.” (Q3 2022 Mondelez International Inc Earnings Call, 11/1/2022)