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Confectionery market - Mondelez sales and profits up

Penny Brooks

2nd May 2018

Mondelez have just released results for the last quarter of the year which show that their sales rose 5.5% to $6.77 billion, which was higher than expected and has resulted in a rise in their share price. The main reason is sales of biscuits, particularly Oreo cookies: “We continue to see encouraging snacking category growth trends, especially in emerging markets,” Chief Executive Dirk Van de Put said. Mondelez generates some 38% of its sales in emerging markets such as Brazil and India.

There is plenty of useful data in reports in the Wall Street Journal and FT, and from Reuters:

Sales in Europe, the company’s biggest revenue generator, jumped 14.4 percent, while emerging markets that include Latin America and Asia saw a 7.6 percent rise in sales.

Net sales from the company’s 'power brands', such as Cadbury Dairy Milk, Milka chocolate and Oreo cookies, rose 8.2 percent to $5.14 billion.

Sales in North America again fell, slipping 1.3 percent to $1.63 billion as consumers’ shift to healthier brands that contain no artificial ingredients or transfats. Also due to lower gum sales; Mondelez owns the Trident, Stride and Dentyne gum brands.

U.S. packaged food companies are facing a spike in costs due to a dearth of drivers, new regulations and higher diesel prices. Rival chocolate maker Hershey last week blamed higher commodity and freight costs for a cut in its full-year sales forecast.

The Chicago-based company has slashed costs to boost margins, which analysts view as part of an attempt to pre-empt shareholder activism or an unsolicited takeover. The CEO aims to to build on the efforts of his predecessor, Irene Rosenfeld, in boosting profitability that has lagged behind Mondelez’s competitors. David Palmer, analyst with RBC, last month wrote that Kraft Heinz buying Mondelez is “among the most likely potential large-scale M&A events in US food”.

Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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