Mondelez Q1 Profit Decreases; To Combine Coffee Business With D.E Master

(RTTNews) - Mondelez International, Inc. (MDLZ) reported first-quarter net earnings attributable to company of $163 million or $0.09 per share, compared to $536 million or $0.30 per share, last year. Adjusted earnings per share was $0.39, for the quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report profit per share of $0.35 for the quarter. Analysts' estimates typically exclude special items. Net revenues were $8.64 billion, compared to $8.74 billion, a year ago. Analysts expected revenue of $8.64 billion for the quarter.

The company confirmed its profit outlook for 2014, but reduced organic revenue growth target to approximately 3% to reflect slower global category growth.

Mondelez International and D.E Master Blenders 1753 B.V. announced their intention to combine their respective coffee businesses to create a pure-play coffee company, with annual revenues of more than $7 billion and an EBITDA margin in the high teens. Upon closing, Mondelez International will receive after-tax cash proceeds of approximately $5 billion and a 49 percent interest in the new company. The new company, Jacobs Douwe Egberts, will be based in the Netherlands.

Mondelez International expects the transactions to be completed in the course of 2015. The company expects the transactions to be accretive to earnings in the first full year following close.

The company also announced plans to reduce operating costs to best-in-class levels through a restructuring program that is expected to deliver cost savings of at least $1.5 billion by 2018, providing additional opportunity for margin expansion beyond its revised 2016 target of 15 to 16 percent. The Board of Mondelez approved a $3.5 billion restructuring program through 2018, comprised of approximately $2.5 billion in cash costs and $1 billion in non-cash costs. The restructuring program is intended primarily to cover severance as well as asset disposals and other manufacturing-related one-time costs.