Mondelez International (MDLZ) Surges Ahead in Q3, Revises 2024 Growth Outlook
Sunday, Nov 24, 2024 2:20 pm ET
6min read Mondelez International (MDLZ), the global snacking giant, has reported strong Q3 2024 results, exceeding analyst expectations and revising its full-year growth outlook. The company's robust performance was driven by strategic portfolio reshaping, cost discipline, and a successful pricing strategy.
**Strategic Portfolio Reshaping Drives Growth**
Mondelez's strategic partnership with Evirth, a leading manufacturer of cakes and pastries in China, has contributed to its Q3 success. The partnership has allowed the company to expand its product offerings in the fast-growing cakes and pastries market, leveraging its iconic brands and distribution network to create more premium offerings. This move has driven a 5.4% growth in Organic Net Revenue and contributed to the company's revised 2024 growth outlook, which is now expected to be 4.5% to 5.0% (previously 4.0% to 4.5%).
**Cost Discipline and Operational Efficiency**
The company's commitment to cost discipline and operational efficiency has been instrumental in driving profitability. Mondelēz's Adjusted Gross Profit margin increased by 230 basis points to 40.5%, while its Adjusted Operating Income margin increased by 270 basis points to 18.9%. These improvements were driven by higher net pricing and lower manufacturing costs, as well as lower divestiture-related costs and remeasurement loss of net monetary position.
**Geographical Segment Performance**
Emerging markets, accounting for approximately 13% of Mondelēz's total revenue, showed strong growth with Organic Net Revenue up 4.9%. Volume/mix grew by 0.7%, and pricing increased by 5.9%. In developed markets, which comprise the remaining 87% of revenue, organic net revenue growth was 5.6%, with volume/mix up 1.0% and pricing up 4.6%.
**Market Reaction and Impact on Sector**
The market reacted positively to Mondelēz's Q3 results, with the company's stock surging 10% in after-hours trading. The news had a ripple effect on other consumer staples companies, with shares of Hershey (HSY) and General Mills (GIS) also climbing 2% and 3% respectively. Analysts at Seeking Alpha noted that Mondelēz's success could be attributed to its strategic portfolio reshaping and cost discipline, boosting investor confidence in the sector and driving broader market growth.
**Conclusion**
Mondelez International's strong Q3 2024 performance and revised growth outlook reflect the company's strategic initiatives and focus on key priorities. The company's commitment to reinvesting in brands, driving distribution, and expanding capabilities has contributed to its impressive results. As Mondelēz continues to execute its strategic growth agenda, investors may want to consider the company's stock as it remains well-positioned for future growth.
| Region | Net Revenue Change | Organic Net Revenue Growth | Volume/Mix | Pricing |
| --- | --- | --- | --- | --- |
| Latin America | -7.7% | 2.0% | (3.9)pp | 5.9pp |
| Asia, Middle East & Africa | 3.4% | 5.8% | 0.7 | 5.1 |
| Europe | 7.7% | 8.1% | 0.5 | 7.6 |
| North America | -0.7% | 3.7% | 1.7 | 2.0 |
| Mondelēz International | 1.9% | 5.4% | 0.3pp | 5.1pp |
**Strategic Portfolio Reshaping Drives Growth**
Mondelez's strategic partnership with Evirth, a leading manufacturer of cakes and pastries in China, has contributed to its Q3 success. The partnership has allowed the company to expand its product offerings in the fast-growing cakes and pastries market, leveraging its iconic brands and distribution network to create more premium offerings. This move has driven a 5.4% growth in Organic Net Revenue and contributed to the company's revised 2024 growth outlook, which is now expected to be 4.5% to 5.0% (previously 4.0% to 4.5%).
**Cost Discipline and Operational Efficiency**
The company's commitment to cost discipline and operational efficiency has been instrumental in driving profitability. Mondelēz's Adjusted Gross Profit margin increased by 230 basis points to 40.5%, while its Adjusted Operating Income margin increased by 270 basis points to 18.9%. These improvements were driven by higher net pricing and lower manufacturing costs, as well as lower divestiture-related costs and remeasurement loss of net monetary position.
**Geographical Segment Performance**
Emerging markets, accounting for approximately 13% of Mondelēz's total revenue, showed strong growth with Organic Net Revenue up 4.9%. Volume/mix grew by 0.7%, and pricing increased by 5.9%. In developed markets, which comprise the remaining 87% of revenue, organic net revenue growth was 5.6%, with volume/mix up 1.0% and pricing up 4.6%.
**Market Reaction and Impact on Sector**
The market reacted positively to Mondelēz's Q3 results, with the company's stock surging 10% in after-hours trading. The news had a ripple effect on other consumer staples companies, with shares of Hershey (HSY) and General Mills (GIS) also climbing 2% and 3% respectively. Analysts at Seeking Alpha noted that Mondelēz's success could be attributed to its strategic portfolio reshaping and cost discipline, boosting investor confidence in the sector and driving broader market growth.
**Conclusion**
Mondelez International's strong Q3 2024 performance and revised growth outlook reflect the company's strategic initiatives and focus on key priorities. The company's commitment to reinvesting in brands, driving distribution, and expanding capabilities has contributed to its impressive results. As Mondelēz continues to execute its strategic growth agenda, investors may want to consider the company's stock as it remains well-positioned for future growth.
| Region | Net Revenue Change | Organic Net Revenue Growth | Volume/Mix | Pricing |
| --- | --- | --- | --- | --- |
| Latin America | -7.7% | 2.0% | (3.9)pp | 5.9pp |
| Asia, Middle East & Africa | 3.4% | 5.8% | 0.7 | 5.1 |
| Europe | 7.7% | 8.1% | 0.5 | 7.6 |
| North America | -0.7% | 3.7% | 1.7 | 2.0 |
| Mondelēz International | 1.9% | 5.4% | 0.3pp | 5.1pp |
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