DEERFIELD, ILL. — A strong second-quarter performance prompted Mondelez International, Inc. to raise its full-year outlook for organic net revenue growth to over 3%, which compared with the previous target of 2% to 3%, and adjusted earnings per share growth to approximately 5% on a constant-currency basis, the high end of the previously stated guidance of 3% to 5%.
Net earnings attributable to Mondelez International for the second quarter ended June 30 totaled $807 million, equal to 56c per share on the common stock, up sharply from $318 million, or 22c, in the prior-year period.
Operating gains, share repurchases and earnings from equity method investments contributed to the result. In the year-ago quarter the company incurred $111 million in asset impairment and exit costs.
Net revenues in the current quarter eased by 0.8% to $6,062 million from $6,112 million. Excluding unfavorable currency impacts, organic net revenue increased 4.6%, driven by improving share trends and volume growth.
“Our first-half performance demonstrates that our more consumer-centric approach and focus on our strategic priorities is working,” said Dirk Van de Put, chairman and chief executive officer, during a July 30 earnings call. “We’re delivering volume-driven top-line growth while driving earnings growth and improved cash flow generation.”
North America net revenues grew 2.5% in the quarter to $1,726 million, led by solid performance in cookie and cracker businesses, including Oreo and belVita.
During the quarter, revenues in emerging markets increased 8% to $2,272 million, while revenues in developed markets grew 2.8% to $3,790 million.
“China, India, Southeast Asia, Russia and Mexico were among some of our business units that drove this growth with a nice balance of volume and price,” said Luca Zaramella, chief financial officer. “Europe delivered an excellent quarter with 3.9% revenue growth driven by strength in the U.K., Germany and Eastern Europe.”
Looking ahead, Mr. Van de Put warned of the impacts a potential Brexit may have on the business. The new prime minister, Boris Johnson, has threatened the possibility of a no-deal British exit from Europe on Oct. 31.
“It’s very difficult to speculate, but there’s different forms of Brexit,” he said. “And if there is a hard Brexit, there will certainly be implications to our business. In the short term, we are largely talking about supply-related issues. And in Q1, as we were preparing for a potential Brexit in March, we put in motion those plans. What does that mean? It means that we increased the level of raw materials we have in the country. We increased the number of warehousing space we have for finished products. We contract more distribution trucks, and so we are ready to keep our products in distribution no matter what.”
He added, “However, there is also a risk that there could be inflation and a currency devaluation as a consequence of Brexit, and those are effects that are much more difficult for us to estimate. And it would lead to a number of other changes that we needed to implement related to pricing, related to sourcing. Those are more of the longer-term effect. And as I said at this stage, very difficult to exactly estimate what the quantitative effect will be.
“We are ready to deal with these challenges, as you can imagine. We are running scenarios, and we are ready to implement. We do believe that over the long term, this is a very strong market. It’s a business that we want to protect, and we are sure that if we have to deal with any short-term or even a little bit longer-term disruption that in the end, we will be back stronger than before. As you might know, we have a very significant production presence in the U.K., and we see ourselves capable in the end to supply the U.K. from the U.K. if need to.”