Yahoo Finance Mondelez International Inc (MDLZ) Q1 2024 Earnings Call Transcript Highlights: Strong ...
Organic Net Revenue Growth: 4.2% this quarter.
Adjusted Gross Profit Dollar Growth: 11.6%.
Adjusted EPS Growth: 16.3%.
Free Cash Flow: Generated $1 billion.
Emerging Markets Revenue Growth: 8.3%.
Developed Markets Revenue Growth: 1.4%.
Chocolate Revenue Growth: 5.8%.
Gum and Candy Revenue Growth: 12.9%.
Europe Revenue Growth: 4.4%.
North America Revenue Growth: 1.3%.
AMEA Revenue Growth: 5.9%.
Latin America Revenue Growth: 7.1%.
Q1 EPS Growth: More than 16% in constant currency.
Stock Repurchase: $600 million in stock repurchased during the quarter.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the challenges in North America and the actions being taken to protect market share, especially considering the challenges at the lower end consumer and the global protection of price points? A: Dirk Van de Put, Chairman & CEO of Mondelez International, Inc., explained that the category is slowing down with some loss of market share, driven by factors like persistent inflation and high interest rates. The company is focusing on increasing Total Distribution Points (TDPs) to improve volumes and market share. They are also becoming more agile in promotional mechanisms and investing in brands despite price increases. Special packs and size adjustments in multipacks are being introduced to maintain attractive price points for consumers.
Q: What are the unusual factors for Q2 that might not be fully factored into the Street forecast? A: Luca Zaramella, Executive VP & CFO, mentioned that the company is on track with its original guidance for 2024. He highlighted that while the biscuit category in the U.S. is a bit softer, overall dynamics around the world are positive. He also noted that pricing has been implemented as targeted, including in Europe, and inflation is in line with expectations. He expects some sequential improvement in volumes as the year progresses.
Q: Can you provide more insight into the performance and expectations for emerging markets? A: Dirk Van de Put noted that emerging markets are showing solid performance with about 8% sales growth in Q1. Key markets like China and India are performing well with strong share gains and distribution increases. He expects continued strong performance in these markets, although there are challenges like inflationary pressures in some regions and boycotts of Western products in the Middle East and Southeast Asia.
Q: How do you see the European chocolate market, especially in light of recent retail data showing strong performance despite price increases? A: Dirk Van de Put commented that the European chocolate market is showing resilience with good performance and market share increases, despite some disruptions. The market's resilience helps in negotiations with retailers, although ongoing high cocoa prices may necessitate further price increases. He also noted that consumer awareness of new chocolate prices post-Easter will be crucial in understanding ongoing elasticity.
Q: What is the expected impact of cocoa prices on financials, and what strategies are in place if high cocoa prices persist? A: Luca Zaramella discussed the company's strategies regarding cocoa prices, emphasizing flexibility and the use of options to manage costs. He expects a market correction in cocoa prices by the end of Q3 but is preparing for all scenarios, including sustained high prices. The company is exploring cost-saving measures and revenue growth management strategies to maintain competitiveness.
Q: Could you elaborate on the gross margin trends expected for the year, especially considering the impact of cocoa prices? A: Luca Zaramella indicated that while Q1 saw good gross margin performance due to strong pricing and cost management, the impact of rising cocoa prices would be more pronounced in the second half of the year, particularly in Q4. He cautioned against expecting continued gross margin expansion at the same rate seen in Q1 throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
