CHICAGO — Amid macroeconomic and consumer uncertainty stirred by tariffs, Mondelez International upheld its fiscal 2025 guidance in reporting a positive first quarter and expectations for improved cocoa pricing.

“We delivered solid results for the first quarter, driven by sound execution despite significant external volatility,” Dirk Van de Put, chairman and chief executive officer, told analysts in an April 29 conference call.  “Our top line grew 3.1% behind strong pricing execution across our chocolate business due to unprecedented input cost for cocoa. We also delivered strong profit dollar generation and free cash flow. These results, along with solid category growth, reinforce our continued confidence in our full-year outlook.”

When announcing fiscal 2024 results in early February, Mondelez projected a 10% decline in adjusted earnings per share in fiscal 2025 – citing “unprecedented cocoa cost inflation” – along with organic net revenue growth of 5% and free cash flow of over $3 billion. The company is maintaining that forecast, despite the global economic volatility and negative consumer sentiment brought on by the Trump administration’s rollout of universal and reciprocal tariffs.

Luca Zaramella, chief financial officer, described tariffs as “causing a small and manageable impact” for Mondelez.

“With respect to tariffs, the vast majority of US production is sourced from the US or is in USMCA (US-Mexico-Canada Agreement) compliance,” he said. “However, there is some sourcing of finished goods and ingredients that are subject to tariffs, as things stand today. Although not particularly large, these are incremental to our last call and have been factored into our current earnings outlook.”

Mondelez’s reaffirmed outlook bucked the recent trend of food companies lowering their guidance amid the economic confusion sowed by tariffs, according to TD Cowen analyst Robert Moskow.

“While Mondelez’s initial guidance for the year may have been overly conservative to begin with, they still stand out as one of the few CPG companies to maintain guidance in an environment of declining consumer confidence,” Moskow said in an April 30 research note.

Net income for the first quarter ended March 31 totaled $402 million, equal to 31¢ per diluted share on the common stock, down from $1.41 billion, or $1.04 per diluted share, a year earlier.

Excluding a 41¢-per-share negative impact from mark-to-market impacts from commodity (mainly cocoa) and currency derivatives, adjusted net earnings were $963 million, or 74¢ per diluted share, down from $1.26 billion, or 93¢ per diluted share, a year ago, Mondelez said. That topped Wall Street’s high-end estimate for adjusted EPS of 71¢ for the quarter.

“As expected, adjusted gross profit was significantly impacted by record cocoa costs and, consequently, this also affected our EPS,” Van de Put said.

He added, “I’d like to reinforce that our chocolate strategy remains on track, and performance to date is broadly in line with our expectations. Our teams started planning for the challenges created by a record cocoa input cost inflation more than a year ago, and we’re confident that the robust, clear strategy we built to navigate these conditions is paying off.”

Though cocoa prices remain elevated, Mondelez expects the cost situation to improve.

| Photo: ©ANDREW GARDNER – STOCK.ADOBE.COM

Mondelez’s first-quarter net revenue inched up 0.2% to $9.31 billion from $9.29 billion a year ago. Organically, revenue climbed 3.1% on a 6.6% rise in pricing, fueled primarily by cocoa costs, and a 3.5% decrease in volume/mix. All regions saw organic revenue growth in the quarter – except for North America – but, due to high cocoa costs, they all also posted significant declines in operating income.

In North America, net revenue fell 4.1% to $2.54 billion on a reported basis and was down 3.6% organically, reflecting decreases of 3.1% in volume/mix and 0.5% in pricing. Adjusted operating income currency dropped 18.3% to $473 million.

“Consumers’ enduring preference for our snacking categories remains solid, despite continuing economic and political concerns in many markets,” Van de Put said. “In North America, continued frustration with day-to-day pricing and cost-of-living challenges continues to drive value-seeking behavior. As a result, growth in the biscuit category is soft, but it continues to hold up better than many other snacking categories.

“Despite overall declining consumer confidence, loyalty to our strong brands like Oreo, Chips Ahoy! and Ritz remains solid, and our investments in price-pack architecture are helping to drive continued share gains.”

Reflecting higher cocoa pricing, chocolate led Mondelez’s categories with first-quarter organic net revenue up 10.1% on a 5.7% decrease in volume/mix. Gum and candy posted a 1% uptick in organic revenue but a 4.2% decrease in volume/mix, while biscuits and baked snacks organic revenue edged up 0.3% on a 1% dip in volume/mix.

“Biscuits and baked snacks grew 0.3% for the quarter,” Zaramella said. “Brands delivering growth included Lu, 7Days, Prince, Club Social, Perfect Snacks and Grenade. However, we saw softer-than-expected results in our US biscuits business, driven by retailer destocking, which resulted in an approximately 60-basis-point volume headwind to the total company and 250 basis points for total North American volume. Additionally, our US biscuit business experienced lower consumption, driven by ongoing consumer confidence declines, resulting in lower frequency and value-seeking behavior.”

Mondelez noted its overall snacks market share rose 1.2% in the first quarter and, excluding the later Easter calendar shift, was up an estimated 3%. Share grew 5.5% in gum and candy, 0.9% in biscuits and baked snacks, and 0.5% in chocolate (up 6.5% excluding the later Easter). The company expects the US destocking dynamic to partially continue into the second quarter, with a favorable impact from Easter timing.

“We held or gained share in approximately 70% of our revenue base (year to date), with strength in both chocolate and biscuits,” Zaramella said. “Category growth numbers are clearly underestimated because of chocolate Easter phasing versus last year. A more normalized number would put total category growth at around 3%. Category growth is due to accelerate as more pricing for chocolate kicks in.”

Cocoa pricing has come down recently but remains “quite elevated” and likely will lead to “meaningful demand declines,” Zaramella said. At the same time, he noted, lower demand eventually could help rein in cocoa costs, along with expectations for rising supplies.

“If we have any upside, we want to reinvest, particularly in our chocolate business,” Van de Put said. “We don’t want to take any shortcuts for short-term gains. We are very focused on the long-term health of the category as well as our business. And it’s all going to depend on where cocoa goes in the rest of the year and where cocoa will be next year. But if it stays at the high level it currently is, we might need to implement more RGM (revenue growth management) in the second half of the year or the beginning of next year. So, agility is going to be key going forward. But so far, so good.”

Despite soft US results, Mondelez turned in a strong first quarter and stands well-positioned, said CFRA Research analyst Arun Sundaram.

“The setup for the rest of 2025 and into 2026 looks promising, with cocoa-driven pricing actions tracking better than expected,” he said. “Q2 should benefit from the Easter calendar shift, and productivity and cost savings remain solid. If cocoa costs ease, we expect Mondelez to reinvest any upside to strengthen its position heading into 2026.”