Mondelez (MDLZ) Q4 Earnings & Sales Beat on Brand Strength
Shares of Mondelez International, Inc. MDLZ grew more than 1% after the trading session on Jan 31, following the impressive fourth-quarter 2022 numbers. The top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Results gained from the resilience of its snacking products, brand strength, broad-based growth across regions, categories and brands, continued strength in emerging and developed markets, and gains from its recent acquisitions.
Shares of this Zacks Rank #2 (Buy) company have gained 5.8% in the past three months compared with the industry’s growth of 0.1%.
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During the quarter, the company announced the sale of its developed market gum business to Perfetti Van Melle. This move will help fund its recent buyouts and streamline its portfolio. Also, it intends to sell the Halls business in the near future.
Quarter in Detail
Adjusted earnings were 73 cents per share, which increased 2.8% year over year and 9.9% on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 71 cents per share. The year-over-year upside was backed by reduced outstanding shares, and solid operating gains. This was partly countered by the increased taxes, elevated interest expenses and lower income from equity method investments.
Net revenues advanced 13.5% to $8,695 million, which beat the Zacks Consensus Estimate of $8,373 million. The uptick was driven by strong organic net revenue growth of 15.4%, and increased sales from the Chipita, Clif Bar and Ricolino buyout, somewhat negated by currency headwinds. Favorable volumes and pricing contributed to organic net revenues.
Revenues from emerging markets increased 23.3% to $3,320 million, while rising 24.7% on an organic basis. Revenues from developed markets moved up 8.2% to $5,375 million, while increasing 10.5% on an organic basis.
Region-wise, revenues in Latin America; Asia, the Middle East & Africa; Europe; and North America increased 43.2%, 1.3%, 2.9% and 28.3% year over year, respectively. On an organic basis, revenues increased 37.1%, 13.6%, 8.7% and 19.5% in the above-mentioned regions, respectively.
The adjusted gross profit ascended to $473 million at cc. The adjusted gross profit margin contracted by 120 basis points (bps) to 36% due to increased raw material and transportation costs, and an adverse mix. These were somewhat negated by favorable pricing.
Mondelez’s adjusted operating income rose $201 million at cc. The adjusted operating income margin contracted by 30 bps to 15% due to inflated input costs and an adverse mix, largely countered by SG&A leverage and favorable pricing.
The company ended the quarter with cash and cash equivalents of $1,923 million, long-term debt of $20,251 million, and total equity of $26,920 million. MDLZ provided $3,908 million of net cash from operating activities as of Dec 31, 2022. Free cash flow was $3 billion for the same period. Management expects a free cash flow of more than $3.3 billion for 2023.
The company returned $700 million to shareholders in the forms of cash dividends and share repurchases. MDLZ’s board approved a share authorization program worth up to $6 billion of Class A common stock valid till Dec 31, 2025.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Driven by the solid quarterly results and the continued momentum in the snacks business, management issued upbeat guidance for 2023. For 2023, MDLZ expects organic net revenues of 5-7%. The company envisions a high single-digit increase in adjusted earnings per share or EPS at cc. Currency movements are likely to negatively impact net revenues by 1% and adjusted EPS by 4 cents in 2023. Adjusted effective tax rate is predicted to be in the low to mid-20.
However, MDLZ expects another year of double-digit inflation stemming from continued elevated cost in packaging, energy, ingredients and labor. The company is also likely to benefit from higher operating income and gains from the acquisitions of Clif and Ricolino. For first-quarter 2023, it anticipates lower margins due to lower volumes in Europe. Europe region is expected to remain drab in the second quarter as well.
3 Other Top-Ranked Consumer Staples Stocks
Here are some other top-ranked stocks from the broader Consumer Staples space, namely e.l.f. Beauty ELF, Conagra Brands CAG and Campbell Soup CPB.
e.l.f. Beauty currently sports a Zacks Rank of 1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of 77%, on average. The stock has rallied 29% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and earnings suggests growth of 17.6% and 8.3%, respectively, from the prior-year reported numbers. The consensus mark for ELF’s earnings per share has moved up a penny in the past seven days.
Conagra Brands, a consumer-packaged goods food company, currently flaunts a Zacks Rank of 1. CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year’s sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the year-ago reported figures.
Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.2% and 4.9%, respectively, from the year-ago reported figures.
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