Mondelez Results Top Estimates, Backs 2015 Outlook

(RTTNews) - Mondelez International Inc. (MDLZ), the snacks business spun off from Kraft Foods, reported Wednesday a profit for the first quarter that doubled from last year, reflecting improved operating margins and organic revenue growth amid higher prices.

Both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also reaffirmed its guidance for the full-year 2015.

However, the company's results took a hit on currency translation due to a stronger US dollar as it generates about 80 percent of its sales outside of North America.

"We're making good progress executing our transformation agenda. Our solid first quarter positions us well to deliver our full year 2015 outlook and 2016 margin targets," Chairman and CEO Irene Rosenfeld said in a statement.

The maker of Oreo biscuits and Cadbury's chocolate reported net earnings attributable to the company of $324 million or $0.19 per share for the first quarter, nearly doubling from $163 billion or $0.09 per share in the prior-year quarter.

Results for the latest quarter include a gain associated with the planned coffee business transaction of $0.20 per share, restructuring program costs of $0.11 per share, and loss on debt extinguishment and related expenses of $0.27 per share.

Excluding items, adjusted net income for the quarter was $687 million or $0.41 per share, compared to $669 million or $0.39 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.38 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter declined 10.2 percent to $7.76 billion from $8.64 billion in the prior-year quarter, hurt by a negative 14.5 percentage point impact from currency, but topped thirteen Wall Street analysts' consensus estimate of $7.72 billion.

Organic net revenue grew 3.8 percent, as the company raised prices to recover higher input costs, including the impact of currency.

On an organic basis, Latin America revenues grew 18.9 percent to $1.26 billion, Eastern Europe, Middle East & Africa revenues increased 11.1 percent to $695 million, and Asia Pacific revenues edged up 0.3 percent to $1.15 billion from last year.

Meanwhile, revenues in Europe edged down 0.6 percent to $2.98 billion and North American revenues edged down 0.3 percent to $1.68 billion from a year ago.

Overall, Power Brands organic revenue for the quarter grew 5.9 percent to $5.40 billion from last year. Emerging Markets generated revenues of $2.97 billion, up 10.8 percent organically. Meanwhile, developed markets organic revenue edged down 0.5 percent to $4.79 billion.

Operating income margin for the quarter improved 60 basis points to 10.4 percent from last year as gross profit margin expanded 80 basis points, partially offset by higher expenses.

Looking ahead to fiscal 2015, the company continues to expect organic net revenue growth of at least 2 percent, adjusted operating income margin of about 14 percent and adjusted earnings per share growth at a double-digit rate on a constant-currency basis.

Street is currently looking for full-year 2015 earnings of $1.71 per share on revenue decline of 10.5 percent to $30.64 billion.

The company estimates foreign exchange translation to reduce 2015 net revenue growth by about 12 percentage points and adjusted earnings per share by about $0.33, due to the strengthening of the U.S. dollar versus other currencies.

"We remain intently focused on productivity and cost reduction to drive strong margin expansion and earnings growth. This enables continued investment in our Power Brands2, supply chain, and sales and distribution capabilities to drive sustainable revenue and earnings growth," Rosenfeld added.

In Wednesday's regular trading session, MDLZ is currently trading at $38.47, up $1.67 or 4.55% on a volume of 6.36 million shares. In the past 52-week period, the stock has been trading in a range of $31.83 to $39.54.