DEERFIELD, ILL. — Mondelez International, Inc. expects good things from Good Thins, the Deerfield-based snack company’s latest product line. Representing the company’s first new snack brand in more than a decade, the baked crackers are made with potatoes, chickpeas or rice and contain no artificial flavors, colors, cholesterol, partially hydrogenated oils or high-fructose corn syrup.
|Irene Rosenfeld, chairman and c.e.o. of Mondelez|
“We launched Good Thins in March, and it has already reached a 1.4 share of the U.S. cracker market,” said Irene Rosenfeld, chairman and chief executive officer of Mondelez, during an April 27 earnings call with financial analysts.
Still, the category experienced weakness in the recent quarter.
“(The U.S.) is our biggest biscuit market, and we did see that category slowing down,” Ms. Rosenfeld said. “There are a lot of factors that contribute there. Some of our biggest customers are changing some of their merchandising policies, which is having an impact. I think we are still performing quite well within those constraints, but it is having somewhat of an impact on our overall performance.
“So I think the facts are … our biscuit revenue in North America was up almost 3%. Very strong volume/mix, but the category itself was a little weaker than we had seen, and our approach to that is just to continue to invest in our strong brands, to continue to introduce innovation like Oreo Thins and Good Thins, which are driving very strong results, and continuing to leverage the fact that we have much more flexibility in our packaging capability as a result of the addition of assets like Salinas (Mexico facility).”
During the quarter, 80% of Mondelez’s biscuit revenue held or gained market share, led by such brands as Oreo and belVita.
“So, we are clearly in charge of the category performance here in the U.S., and we have very strong plans in place to continue to drive that,” Ms. Rosenfeld said.
For the first quarter ended March 31, net earnings attributable to Mondelez were $554 million, equal to 35c per share on the common stock, up 71% from $324 million, or 20c per share, for the prior-year period. Net revenues fell nearly 17% to $6,455 million from $7,762 million, driven by the negative impact of the company’s coffee transaction and currency headwinds. On an organic basis, net revenues advanced 2.1%, the company said.
Mondelez’s financial performance was helped by significant margin expansion as the company continued to reduce supply chain and overhead costs.
“We delivered this growth, despite the volatile operating and currency environment that pressured category growth, especially in many of our larger emerging markets,” Ms. Rosenfeld said.
For the full year, the company expects organic revenue growth of at least 2%, adjusted operating income margin of 15% to 16%, and double-digit adjusted earnings per share growth on a constant currency basis.
To drive growth in biscuits, Ms. Rosenfeld said the company plans to expand some of its platforms to additional markets. As an example, Oreo Thins cookies, which debuted in China, have been introduced in the United States, Canada and Australia, and are expected to generate $200 million this year. Another product, belVita Crunchy breakfast biscuits, will launch into new markets and is expected to become a $500 million business this year.In conjunction with releasing first-quarter results, Mondelez announced the departure of Mark A. Clouse, chief commercial officer, who has been named c.e.o. and director of the board at Pinnacle Foods Group, Inc. Mondelez said it does not plan to appoint a new chief commercial officer.