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Mondelez Earnings: Strong Global Growth Offsets North America Weakness

  • Writer: Hardik Shah
    Hardik Shah
  • Jul 29
  • 3 min read
Mondelez Customer Behavior and Impact
Source: Mondelez Earnings Deck

TLDR


Revenue Strength: Organic growth of 5.6% driven by strong pricing, especially in chocolate and emerging markets.

Margin Trends: Adjusted operating margin declined 360 basis points due to cocoa inflation and mix.

Forward Outlook: FY25 guidance unchanged; pricing actions and productivity to offset cocoa costs.


Business Overview


Mondelez International, Inc. (Nasdaq: MDLZ) is a global snacking leader with iconic brands like Oreo, Cadbury, Ritz, and Toblerone. With operations in over 150 countries, its business spans biscuits, chocolate, gum, and candy. Mondelez generates nearly equal revenue from developed and emerging markets, and its channels span retail, club, value, and e-commerce platforms.


Mondelez Earnings Q2'25


  • Net Revenues: $8.98B (▲7.7% YoY); Organic growth +5.6%, pricing +7.1%, volume/mix −1.5%.

  • Gross Profit: $2.94B (▲5.0%); Adjusted down 11.3% at constant FX due to cocoa and transport inflation.

  • Operating Income: $1.17B (▲37.2% reported); Adjusted down 16% constant FX.

  • Adjusted EPS: $0.73 (▼14.5% constant FX); Diluted EPS $0.49 (▲8.9%).

  • Free Cash Flow: $0.8B YTD; capital return of $2.9B in H1 via buybacks and dividends.


Despite top-line growth, profitability was pressured by cocoa-driven inflation and unfavorable mix.


Forward Guidance


Management Outlook:

  • Reaffirmed FY25 organic net revenue growth of ~5%.

  • Adjusted EPS expected to decline ~10% on a constant currency basis.

  • Free cash flow forecasted at $3B+.


Risks & Opportunities:

  • Key risks include cocoa cost volatility, U.S. consumer anxiety, and macro uncertainty (e.g., tariffs).

  • Cocoa market showing early signs of easing. CEO Dirk Van de Put noted, “We feel good about the quarter… our categories are resilient and we remain confident in our strategic agenda.”


Operational Performance


  • ERP implementation expenses and elevated input costs (especially cocoa) weighed on adjusted margins.

  • Productivity efforts are ramping in H2 to counter inflationary pressure.

  • Segment performance varied sharply:

    • Europe: Organic growth +12.5%; strong share gains despite heat-related chocolate softness.

    • Emerging Markets: Robust pricing (+11%) and volume (+0.2%) led to 10.2% organic growth.

    • North America: Revenue down 3.5%; biscuit volumes weak amid consumer caution.


Market Insights


  • Retailer Dynamics: Trade destocking in the U.S. and a shift toward value channels like club and dollar stores.

  • Category Trends: Snacking outpaces food in Europe; chocolate remains resilient despite price hikes.

  • Competitive Landscape: Mondelez holds or grows share in most markets, leveraging selective promotions and price-pack architecture.


Consumer Behavior & Sentiment


  • In the U.S., consumer anxiety is prompting shifts to essentials and lower price points.

  • Basket sizes are scrutinized, multipacks and price points under $4 are gaining traction.

  • In emerging markets, bulk and discount channels are popular amid inflation worries.


Strategic Initiatives


  • Pricing & RGM (Revenue Growth Management): Executed broad-based pricing while protecting high-velocity packs.

  • Supply Chain: Productivity initiatives expected to improve manufacturing costs in H2.

  • Media Spend: Working media protected in 2025; plans to reinvest in 2026 to support volume and brand equity amid elevated chocolate prices.


Capital Allocation


  • Dividend raised by 6% to $0.50 per share.

  • Continued opportunistic buybacks below $60/share.

  • Net debt increased to $19.4B, reflecting FX shifts and capital returns. CFO Luca Zaramella noted, “We’ve been buying back shares at a compelling price… but remain pragmatic based on cash flow and macro conditions.”


The Bottom Line


Despite facing cocoa cost inflation and soft U.S. demand, Mondelez delivered solid organic revenue growth and reiterated full-year guidance. Key investor watchpoints include:

  • Cocoa Price Trend: Supply recovery could ease pressure by 2026.

  • North America Turnaround: Execution on pricing, format strategy, and club/value channel expansion is critical.

  • Volume Rebound Potential: CEO Dirk Van de Put emphasized, “We remain confident in our ability to deliver… powered by the resiliency of our categories and strength of our brands.”



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