DEERFIELD, ILL. — Mondelez International, Inc. managed to turn in a solid third quarter on both the top and bottom line, overcoming challenges from hurricanes, earthquakes and goods and services tax in India.
Net income in the third quarter ended Sept. 30 totaled $992 million, equal to 66c per share on the common stock, up sharply from $548 million, or 35c per share, in the same period a year ago. Net revenues increased 2.1% to $6,530 million from $6,396 million.
|Irene Rosenfeld, chairman and c.e.o. of Mondelez|
“Organic net revenue increased 2.8%, fueled largely by the strength of our Power Brands, improving momentum in emerging markets and strong performance in Europe,” Irene B. Rosenfeld, chairman and chief executive officer, said during an Oct. 30 conference call with analysts. “We estimate that our top-line results included a net benefit of approximately 60 basis points associated with recovery from the malware incident as we recaptured some delayed shipments from the end of Q2.”
Ms. Rosenfeld said the company’s Power Brands grew 3.8% during the quarter, significantly outpacing the category with Milka and Cadbury Dairy Milk in chocolate and Oreo and belVita in biscuits performing especially well.
“Our growth strategies continue to gain traction,” she said. “We’re contemporizing our core by distorting resources behind our Power Brands and by upgrading the well-being credentials of our portfolio. Our belVita brand continues to be a standout. It’s growing mid-single digits globally, driven by our base breakfast biscuits as well as impactful line extensions like belVita Protein and belVita Bites.
“Ritz Crisp & Thins with all the taste and half the fat of the leading potato chip is taking share and exceeding our expectations. We’re also increasing our presence in convenience stores, thanks to our more flexible price-pack architecture. And we successfully launched a new savory snack brand, Véa, during the quarter. We’re off to a good start as we ramp up distribution.”
Ms. Rosenfeld said Mondelez also is making good progress in its effort to fill geographic white spaces.
“Milka Oreo Chocolate in the U.S. is performing well, and we’ve recently expanded our offerings to include Milka Oreo Mint,” she said. “The repatriation of our Nabisco brands in Japan is also going well as we recently launched Oreo Thins and new Ritz sandwich biscuits. And in China, our Milka brand has established a solid beachhead in the chocolate market in its first year.”
While developed markets grew 1.6% during the third quarter, Ms. Rosenfeld said the company’s North America unit is the only region performing below expectations. The region returned to positive growth in the quarter, but Ms. Rosenfeld said Mondelez still has more work to do before the region is able to deliver on its full potential. The company hopes the arrival of Glen Walter, who recently was named president of the North America region, will spur growth.
“We think we’re pretty well positioned to begin to capitalize on the opportunity in North America,” Ms. Rosenfeld said. “We have significantly put the malware issues behind us. We are starting to see the hard work that Tim Cofer (chief growth officer) and the team have done to stabilize the business and improve our execution.”
Taking a look at the broader food industry, Ms. Rosenfeld, who is set to retire in November, was asked by an analyst for her perspective on the state of the industry. She indicated that the one constant has been “cosmic changes” every couple of years.“Whether you think about the advent of the supercenter, (or) you think about the beginning of the rise of e-commerce, we have seen many different trends,” she said. “And those companies that have been successful have seen those trends coming and have addressed them. So I don’t think this is radically different. I do think the speed of the changes is perhaps more pronounced than we might have seen in the past. But I have great confidence as we look ahead, particularly to what we’re seeing going on, on the consumer front, the customer front and the channel shifts, that we’re well positioned. But I do think companies have to take those cosmic changes quite seriously and have to adapt accordingly.”