Milling & Baking News - August 20, 2013 - 14

Financial Results 

Despite strong cookie sales,
Mondelez earnings under pressure

mixes
bases
concentrates

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14 / August 20, 2013 Milling & Baking News

DEERFIELD, ILL. — Continued
strength in the U.S. cookies business
spurred stronger sales in North America, but challenges in gum in developed
markets weighed on second-quarter
results at Mondelez International Inc.
Net income in the quarter ended
June 30 was $616 million, equal to 34c
per share on the common stock, down
40% from $1,029 million, or 58c per
share, in the same quarter in
2012. Results for the prior-year
quarter included earnings from
discontinued operations of $544
million. Excluding the items, adjusted earnings for the second
quarter of fiscal 2013 were 37c
per share, compared with 36c
per share a year ago. Net sales
were $8,595 million, up 0.8%
from $8,527 million.
“Faster top-line growth in
emerging markets, strong volume/mix gains and increasing
market shares globally drove our
first-half business performance,
which was in line with the expectations
we outlined earlier in the year,” said
Irene Rosenfeld, chairman and chief executive officer. “For the second half of
2013, we expect our top-line growth to
accelerate from investments in emerging markets and continued momentum
on our global snacking platforms and
Power Brands, despite indications of
slowing category growth in key markets such as China, Brazil and Russia.
On the bottom line, we expect margins
to expand through overhead leverage
as well as continued aggressive focus
on cost reduction efforts.”
Operating income in North America
was $225 million, unchanged (on an
adjusted basis) from $225 million in
the second quarter in 2012. Sales were
$1,707 million, up 2.3%. The sales gain
broke down as 3.2% from volume and
mix, which more than offset a 0.9% decline in price.
“U.S. biscuits was a standout, with
revenues up more than 5% in the second quarter,” Ms. Rosenfeld said during an Aug. 7 conference call with analysts. “In fact, that represents the eighth
consecutive quarter of growth of 5%
or more. Oreo, Honey Maid, belVita,
Chips Ahoy! and Triscuit each made
solid contributions to the second half.
“This business continues to benefit
from the renewed focus on in-store execution by our direct-store delivery sales
force following the spin. For example,
through our ‘One More in the Store’

initiative, we increased the number of
displays nearly 17% in Q2. D.S.D. is
also a key enabler to get our new products on shelves. In the first half, 9 of the
top 10 new biscuit products in the U.S.
were ours. As a result, our market share
is up 140 basis points in the quarter and
100 points year to date.”
On the expansion front, Ms. Rosenfeld elaborated on Mondelez’s plans to
build the

world’s largest biscuit/cookie plant,
which was first announced a month
ago. She said the company will invest
$350 million in the construction of the
new facility in Mexico.
The new plant will have five production lines and will start operating
in mid-2014.
“When its doors open in the second
half of 2014, this facility will support
biscuit growth across the Americas
and will enhance margins by utilizing state-of-the-art technologies that
enable manufacturing at world class
costs,” Ms. Rosenfeld said.
For the six months ended June 30,
net income was $1,184 million, or 66c
per share, down 36% from $1,842 million, or $1.04 per share, in the same
period a year ago. Net sales increased
0.8% to $17,339 million from $17,194
million. Operating income fell 8% to
$1,699 million from $1,840 million.
In addition to its financials, Mondelez on Aug. 7 said its board of directors approved a “significant increase”
in its share repurchase program to $6
billion from $1.2 billion through 2016,
and an 8% increase in the company’s
quarterly dividend to 14c per share.
“We believe the combination of strong
top-line growth in emerging markets,
double-digit e.p.s. gains, higher dividends and a substantial increase in
share buybacks creates a highly attractive mix that will deliver superior shareholder returns,” Ms. Rosenfeld said. MBN
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Milling & Baking News - August 20, 2013

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