Mondelez International Inc. - Ordinary Shares (MDLZ) Q2 Earnings call transcript Jul 30, 2024

Mondelez International, a leading snacking powerhouse, recently held its second quarter 2024 earnings call, revealing a solid financial performance and strategic initiatives to drive sustainable long-term growth. The call was led by Shep Dunlap, Vice Senior Vice President, Investor Relations, with key insights provided by Chairman and CEO Dirk Van de Put and CFO Luca Zaramella. The call highlighted several key themes and trends, underscoring the company's focus on profit dollar growth, cost management, and strategic investments.

Financial Performance and Outlook

Mondelez reported a solid first half of the year, with organic net revenue growing 2.5% and adjusted gross profit dollar growth of 11.3%. The company successfully completed its annual pricing in Europe, positioning it well for top line and volume growth in the second half. Despite challenges in various markets, Mondelez continued its track record of strong free cash flow generation, totaling $1.5 billion. The company also announced a dividend increase of 11%, marking 9 consecutive years of double-digit dividend growth.

Strategic Initiatives and Future Growth

Mondelez is focusing on expanding its presence in emerging markets, particularly in China and India, where the company is seeing strong growth in online and social commerce. The company is also investing significantly in its brands and capabilities to drive sustainable, long-term growth. These efforts are supported by a proven playbook for price pack architecture, allowing the company to offer a broad range of options to meet different consumer needs and preferences.

Market Share and Competitive Landscape

Mondelez reported holding or gaining share in 40% of its revenue base, with strength in chocolate and Gum & Candy categories. The company faced challenges in its U.S. biscuit business, which accounts for approximately 25 percentage points of revenue, but has plans to address these issues by increasing distribution points and implementing targeted promotions. The company is also exploring strategic partnerships, such as the recent collaboration with Lotus Bakeries, to expand its sweet biscuit business in India and innovate its European chocolate business.

Operational Efficiencies and Challenges

Mondelez acknowledged the challenges in its European market, including customer disruption and rising inflation, but expressed confidence in its ability to navigate these challenges. The company is implementing cost measures to protect its bottom line and ability to invest in the category, particularly in light of the volatile cocoa market. Mondelez is also exploring opportunities to optimize nonworking media and improve productivity to enhance its financial performance.

Investor and Analyst Engagement

The call featured a series of questions from key shareholders and investors, addressing topics such as volume growth, pricing strategies, and future outlook. Mondelez executives provided detailed insights into their strategic initiatives, financial performance, and market dynamics, demonstrating a strong commitment to transparency and investor engagement.

Conclusion

Mondelez International's second quarter 2024 earnings call highlighted a solid financial performance, strategic initiatives, and a focus on sustainable long-term growth. The company's ability to navigate challenges in various markets, particularly in Europe and the U.S., while maintaining strong profit dollar growth and free cash flow, is a testament to its resilience and strategic acumen. Mondelez's continued investments in emerging markets, brand expansion, and operational efficiencies position it well for future growth, particularly in the competitive snacking industry.