Mondelez International ((MDLZ)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Mondelez International’s recent earnings call revealed a mixed sentiment, reflecting both optimism and caution. While the company is capitalizing on growth opportunities in emerging markets and implementing strategic initiatives in the U.S. and North American supply chain, it faces significant challenges in the European chocolate market and the U.S. biscuit market due to economic pressures and pricing elasticity.
Emerging Markets Growth
Mondelez International reported robust performance in emerging markets, with Brazil experiencing double-digit growth and India also showing significant gains. These successes come despite facing challenges in Argentina and China, highlighting the company’s strategic focus on expanding its footprint in high-growth regions.
Positive Steps in U.S. Biscuit Market
In the U.S., Mondelez identified promising growth areas within the biscuit market, particularly in premium segments. Brands like Tate’s and better-for-you offerings, such as Perfect Bar and Builder’s Bar, have shown impressive growth of over 20%, indicating a shift in consumer preferences towards healthier and premium products.
Supply Chain Program in North America
A new multiyear supply chain program has been introduced in North America, aimed at reducing costs and enhancing logistics. This initiative is expected to have a significant impact by 2027, reflecting Mondelez’s commitment to operational efficiency and long-term growth.
Decline in European Chocolate Market
The European chocolate market has faced a decline in volume, driven by a 30% increase in cocoa prices. This has led to higher-than-anticipated price elasticity, affecting consumer behavior and posing challenges for Mondelez in maintaining its market position.
Challenges in U.S. Biscuit Market
The U.S. biscuit market has experienced a slowdown, with a 4% volume decline attributed to consumer economic concerns and frustration with pricing. This highlights the need for Mondelez to adapt its strategies to better align with consumer expectations and economic conditions.
Impact of Economic Factors
Economic factors such as tariffs, U.S. destocking, and a heatwave in Europe have posed unexpected challenges for Mondelez, impacting its fiscal year 2025 guidance. These elements underscore the complex environment in which the company is operating.
Forward-Looking Guidance
Mondelez International’s forward-looking guidance reflects adjustments in response to unforeseen economic factors. The company revised its 2025 guidance, with CEO Dirk Van de Put discussing the impact of a 30% price increase in chocolate and a 4% volume decline in the U.S. due to economic concerns. Despite these challenges, CFO Luca Zaramella expressed confidence in achieving high single-digit EPS growth in 2026 through cost-saving strategies and strategic investments. The company aims for over 4% organic net revenue growth and improved EBIT for Q4, supported by seasonal activations and pricing strategies.
In conclusion, Mondelez International’s earnings call highlighted a blend of optimism and caution. While the company is making strides in emerging markets and the U.S. biscuit sector, it faces significant challenges in Europe and the broader economic landscape. The forward-looking guidance reflects a strategic approach to navigating these complexities, with a focus on long-term growth and operational efficiency.