Mondelēz International, Inc. (NASDAQ: MDLZ) today reported its first quarter 2016 results, with strong Adjusted Operating Income margin expansion and Adjusted EPS growth on a constant currency basis, as well as solid Organic Net Revenue growth.
“We’ve had a good start to the year,” said Irene Rosenfeld, Chairman and CEO. “We significantly expanded margins by continuing to reduce supply chain and overhead costs. In addition, we delivered improved volume/mix in developed markets, while effectively managing through the volatile operating environment in emerging markets. As a result, we’re confident in our ability to deliver our 2016 outlook that we shared in February.”
On a reported basis, net revenues were $6.5 billion, down 16.8 percent, driven by a negative 9.4 percentage point impact from the coffee transaction and a 7.2 percentage point headwind from currency. Operating income was $722 million, down 11.0 percent. Diluted EPS was $0.35, up $0.16.
Organic Net Revenue increased 2.1 percent, as the company increased volume/mix in developed markets and raised prices to recover currency-driven input cost inflation in inflationary markets. Power Brands grew 3.8 percent. Organic Net Revenue from emerging markets3 was up 3.6 percent and developed markets increased 1.3 percent.
Adjusted Gross Profit1 margin was 39.7 percent, up 170 basis points. Strong net productivity drove the improvement, partially offset by a 50 basis point reduction from mark-to-market adjustments associated with commodity and currency hedging.
Adjusted Operating Income margin expanded 240 basis points to 15.1 percent. The company continued to reduce overhead costs and increased advertising and consumer support as a percent of revenue.
Adjusted EPS grew 30.8 percent on a constant-currency basis, driven primarily by Adjusted Operating Income improvement.
Share Repurchases
In the first quarter, the company repurchased nearly $1.2 billion of its common stock at an average price of $41.04 per share.
Outlook
The company reaffirmed its outlook for 2016, as described below.
In addition, the company reduced its estimate of the negative impact of foreign exchange translation on 2016 net revenue growth to approximately 3 percentage points (from approximately 6 percentage points) and on Adjusted EPS to approximately $0.05 6 (from approximately $0.13).
Mark Clouse to Leave Company
Mondelēz International also announced today that Mark Clouse, Chief Commercial Officer (CCO), will leave the company to become CEO of a North American publicly traded food company starting in late May. In his 20 years with the company, Clouse has managed a number of regional and global businesses and served as Chief Growth Officer prior to his appointment as CCO at the beginning of 2016.
“We’re proud of and grateful for Mark’s significant contributions to our company over the last two decades,” said Rosenfeld. “He’s a seasoned executive and natural leader who has built our brands and businesses, while always demonstrating a deep passion for developing others. Mark has proven he’s ready for this exciting next step in his career and we wish him and his family all the best.”
The company does not plan to appoint a new CCO.