CHICAGO — With about 3% to 4% of the global snack cakes and pastries market, Mondelez International, Inc. already stands as the No. 2 player in the category. But management expects more, and plans are in place to lift the Chicago-based company’s market share closer to double digits.

“Cakes and pastries is not a small category,” Dirk Van de Put, chairman and chief executive officer, said during a July 27 conference call to discuss second-quarter financial results. “It’s not the size of biscuits, but it’s not too far away from it. And, so, it’s a big opportunity around the world.”

Describing the category as “fragmented” but with “relatively commoditized products,” cakes and pastries is ripe for strong brands and high-quality products, Mr. Van de Put said. To that end, Mondelez has made a push around the world to expand its offerings. Recent launches include Oreo Airy Cake in China, Cakesters in the United States and prepackaged croissants under the Chipita brand in Europe.

“The (cakes and pastries) category itself has been growing quite nicely over the past three years,” Mr. Van de Put said. “It is a category that exists across all markets. It covers different occasions than our typical biscuits and chocolate, so that makes it very interesting for them. And, so, we think with these new quality products and our brands, we can really make a significant impact. And I’m not going to give an exact number, but we would expect that our cakes and pastry business in the coming year should double or triple and lift us up to close to a 10% market share. For us, it’s going to be a significant contribution to the growth of the company.”

Mr. Van de Put’s comments on the cakes and pastry category came against a backdrop of strong financial results for Mondelez. Net income at the company in the second quarter ended June 30 totaled $944 million, equal to 69¢ per share on the common stock, up 26% from $747 million, or 54¢ per share, in the same period a year ago.

Quarterly sales rose 17% to $8.51 billion from $7.27 billion the year before.

“We obviously feel quite good about how our portfolio is performing,” Mr. Van de Put said. “We have brought growth in the different regions, in the different categories across most of our brands. The pricing went through quite well, strong pricing, I would say, compared to others. We have very good volume/mix growth in three out of four regions. And the only region that was disrupted was Europe, but that was due to customer disruption. And we foresee, for the second half, that we will see solid volume growth in Europe.”

He said North America has finally recovered and the company is gaining share in the AMEA. Emerging markets also are doing well broadly in the top and bottom line, he said.

“We are generating good gross profit, so we can continue to invest strongly in our brands and our capabilities,” he said. “The acquisitions are doing well. I would point to Clif. And yes, we have double-digit growth in adjusted and real EPS. So, the whole picture, for us, looks pretty good.”

Sales in North America rose 12.4% during the quarter, driven by higher pricing, volume/mix and strength from the base biscuits business and other ventures, including Give & Go, Perfect Snacks and Tate’s Bake Shop.

“Tate’s also posted robust growth and delivered another operating margin increase of double-digit in percentage points in Q2 versus last year,” said Luca Zaramella, chief financial officer. “Now profitability is approaching the level of total North America, but we still have to generate material synergies, both on revenue and cost line. … Clif is a business that is growing, has now some margins and still with meaningful synergy potential.”

Mr. Van de Put provided more color on the Clif business later in the conference call.

“We’ve seen in the first half very strong double-digit revenue growth, and the margins, the (operating income) margin versus previous year is up more than 1,000 basis points,” he said. “… We’ve increased prices more aggressively than Clif would have done historically. We increased prices in August, in January and another one later in Q1. And, so, we see low elasticity, I would say. So that’s having a big impact.

“The second big thing that we are doing is the service has improved. We reduced SKUs (stock-keeping units). And we started to operate the plants a little bit better, and so that has given to a good increase in the service level. Then we changed the promotional plan. That has successfully kicked off. Fourth thing is that our media buying is more efficient than theirs. We were able to also get some benefits from that.

“Those are some of the things we’ve done. The integration is taking place in a number of steps. Like a big one is the systems integration later on in the year. But so far, where we have streamlined the teams and we’ve brought more clarity on how we want to operate the business, that is all going well.”

Mondelez’ net income for the first six months of fiscal 2023 was $3.03 billion, or $2.22 per share, up 89% from $1.6 billion, or $1.16 per share, in the same period a year ago.

Sales rose to $17.67 billion from $15.04 billion the year before.

The company’s strong top-line growth prompted management to raise its organic net revenue growth projection to 12%, up from its previous forecast of 10%. The company also now expects adjusted EPS growth of 12%, up from 10%.

“There is a good chance that we exceed the 12% plus guidance, but I prefer having another quarter under the belt and then narrow guidance for Q4,” Mr. Zaramella said. “If all things play out as we have in mind, as I said, there are good chances we will exceed the guidance. Bear in mind that we want to start 2024 strong. And, so, if there is upside in terms of profitability and EPS, we might decide to reinvest selectively some of the upside to get really a fast start into 2024, too.”