DEERFIELD, Ill., US – Mondelez International, Inc. reported yesterday 2013 results, in line with recent expectations.
“In our first full year as a global snacking company, we delivered solid revenue growth and strong market share performance in the face of a significant slowdown in our categories as 2013 progressed,” said Irene Rosenfeld, Chairman and CEO.
“At the same time, we accelerated investments in emerging markets, strengthened our balance sheet and returned $3.6 billion of cash to our shareholders. Nevertheless, we’re disappointed that our results were below what we and our shareholders originally expected.
“We’re committed to improving results in 2014 and beyond. Specifically, we expect to grow organic revenue at or above our category growth rate, which we estimate at approximately 4 percent in 2014.
In addition, we remain focused on increasing efficiency and aggressively reducing costs in both our supply chain and overheads to deliver strong margin gains throughout the year.
Although we anticipate near-term economic conditions will remain challenging, the plans we are executing give us great confidence in our potential to significantly expand margins and deliver strong top-line growth in 2014 and the years ahead.”
Full Year Highlights
– Net revenues increased 0.8%; Organic Net Revenues grew 3.9%, despite a (0.8)pp impact from lower coffee revenues
– Strong market share performance with nearly 70% of revenues gaining or holding share
– Emerging markets revenues increased nearly 9%; BRIC markets up nearly 10%
– Operating Income margin was 11.2%; Adjusted Operating Income(1) margin was 12.0%
– Diluted EPS was $2.19; Adjusted EPS(1) was $1.51, up 13.5% on a constant currency basis
– Company repurchased $2.7 billion of shares
– Net debt reduced by $0.5 billion; tendered and refinanced $3 billion of higher cost debt
Fourth Quarter Highlights
– Net revenues decreased 0.1%; Organic Net Revenues increased 2.5%, despite a (0.7)pp impact from lower coffee revenues
– Operating Income margin was 10.6%; Adjusted Operating Income margin increased 2.9 pp to 13.9%
– Diluted EPS was $1.00; Adjusted EPS was $0.42, up 16% on a constant currency basis
– Organic Net Revenue to grow at or above category growth, approximately 4%
– Adjusted Operating Income growth of low double digits on a constant currency basis, resulting in an expected Adjusted Operating Income margin in the high 12% range
– Adjusted EPS of $1.73 to $1.78, up double digits on a constant currency basis
Full Year Results
Net revenues were $35.3 billion, up 0.8 percent. Operating income increased 9.2 percent to $4.0 billion, while operating income margin was 11.2 percent. Diluted EPS was $2.19, including $0.90 from discontinued operations reflecting the net gain from the resolution of the Starbucks arbitration.
Organic Net Revenues increased 3.9 percent, driven by strong volume/mix of 3.4 percentage points as well as favorable pricing of 0.5 percentage points.
Lower coffee revenues, reflecting the pass-through of lower green coffee costs, tempered growth by 0.8 percentage points. Market share performance was strong with nearly 70 percent of revenues gaining or holding share.
Revenues from emerging markets were up 8.8 percent, led by a nearly 10 percent gain in the BRIC markets. Developed markets increased 0.8 percent as growth in North America and Europe was partially offset by a mid-single digit decline in Asia Pacific.
Power Brands grew 6.5 percent. Oreo, Tuc, Club Social, belVita and Barni biscuits, Cadbury Dairy Milk and Lacta chocolate and Tassimo coffee each posted double-digit increases.
Adjusted Operating Income increased 4.7 percent on a constant currency basis. Volume/mix-driven gross profit growth was partially offset by increased investments in sales capabilities and route-to-market expansion as well as the net impact of one-time items.
Adjusted Operating Income margin was 12.0 percent, down 0.2 percentage points, including a negative impact of 0.3 percentage points due to the devaluation of the Venezuelan bolivar.
Adjusted EPS was $1.51, including a negative $0.09 impact from currency. On a constant currency basis, Adjusted EPS increased 13.5 percent, largely reflecting a positive impact of $0.07 from lower taxes and $0.04 from operating gains.
Free Cash Flow excluding items was $2.3 billion driven by earnings growth and working capital improvement.
Revision to Net Earnings and EPS
In the first nine months of 2013, the company incorrectly recorded certain non-cash, tax-related items. The company has corrected the recording of these items, which reduced 2013 diluted EPS by $0.03 and Adjusted EPS by $0.02.