Mondelez International Q3 Profit Beats View, Lifts 2014 Earnings Outlook

(RTTNews) - Mondelez International Inc. (MDLZ), the snacks business spun off from Kraft Foods, on Wednesday reported an 11 percent decline in profit for the third quarter from last year, reflecting lower revenues and higher expenses.

Adjusted earnings per share for the quarter beat analysts' estimates, while revenues missed their view. Looking ahead, the company raised its earnings and operating income margin growth forecast, but affirmed its outlook for revenue growth.

Irene Rosenfeld, chairman and CEO of Mondelez said, "We continue to drive top-tier earnings growth and margin expansion in a challenging operating environment. With global retail and consumer demand expected to remain soft in the near term, we're sharply focused on the execution of our productivity and cost-reduction programs to drive earnings growth."

The maker of Oreo biscuits and Cadbury's chocolate reported that the third-quarter net earnings attributable to the company was $899 million or $0.53 per share, down from $1.01 billion or $0.56 per share in the year-ago period.

Adjusted net earnings, which excluded certain items, were $0.50 per share for the latest quarter, compared to $0.40 per share in the year-ago period.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter declined 2 percent to $8.34 billion from $8.47 billion in the prior-year quarter. Analysts were looking for revenue of $8.38 billion.

In the quarter, improved revenue results in Latin America, Asia Pacific and Eastern Europe, Middle East & Africa or EEMEA regions were offset by weak performance in Europe and flat results in North America.

Organic net revenue grew 2.7 percent, including a 5.8 percentage point impact from pricing. Volume/mix declined 3.1 percentage points.

Organic net revenue from emerging markets rose 9 percent, while revenue from developed markets decreased 1.3 percent. Overall, Power Brands grew 5.1 percent.

The company's operating income for the quarter declined 32 percent from the year-ago period to $853 million, and includes a negative 27.3 percentage point impact from cycling the prior-year reversal of an indemnity accrual related to the 2010 acquisition of Cadbury as well as a negative 17.5 percentage point impact from restructuring costs.

The company's adjusted operating income margin expanded 140 basis points to 13.6 percent, driven primarily by strong gains in Europe and North America.

Looking ahead to fiscal 2014, Mondelez now forecasts adjusted earnings on a constant currency basis in a range of $1.82 to $1.87 per share, and including the currency impact, in a range of $1.70 to $1.75 per share.

Earlier, the company forecast adjusted earnings on a constant currency basis of $1.73 to $1.78 per share, and including the currency impact, in a range of $1.64 to $1.69 per share.

Analysts expect the company to earn $1.67 per share for the year.

Mondelez affirmed its outlook for full-year organic net revenue growth of 2 to 2.5 percent. The company now expects adjusted operating income margin of about 13 percent, compared to the prior forecast for adjusted operating income margin in the high 12 percent range.

MDLZ closed Tuesday's trading at $35.03. In Wednesday's pre-market activity, the stock is adding $1.49 or 4.25 percent to $36.52.