Mondelez’s Sweet Success: Strong Growth Amid Cocoa Cost Challenges
- Hardik Shah
- Feb 4
- 3 min read
Updated: Feb 11
TLDR
Strong Financial Performance: Mondelez achieved 4.3% organic net revenue growth, a 5.1% increase in adjusted gross profit, and a 13% rise in adjusted EPS in FY 2024 despite inflationary pressures.
Cocoa Cost Inflation Challenges: The company faces unprecedented cocoa cost inflation, impacting profitability, but remains confident in strategic pricing, cost control, and brand investments.
Optimistic Outlook for 2025: Management expects 5% organic net revenue growth in 2025 but anticipates a 10% decline in adjusted EPS due to cocoa costs. However, they foresee EPS growth resuming in 2026.
Business Overview
Mondelez International is a global leader in snacking, operating in over 150 countries. Its portfolio includes Oreo, Cadbury Dairy Milk, Toblerone, Ritz, LU, and BelVita, among other iconic brands. The company focuses on chocolate, biscuits, baked snacks, and gum & candy, with both developed and emerging markets contributing to growth.
Financial Results
Revenue: Grew 4.3% organically in FY 2024, driven by higher pricing and solid brand performance.
Gross Profit: Increased 5.1% YoY despite rising input costs, supported by price increases and productivity improvements.
Operating Income: Grew 8.1% YoY, with margins improving to 17.4% due to cost discipline and mark-to-market gains.
EPS: Adjusted EPS rose 13% on a constant currency basis, reflecting strong operating gains.
Cash Flow: Generated $3.5 billion in free cash flow, with $4.7 billion returned to shareholders through dividends and buybacks.
Operational Performance
Brand Strength: Mondelez saw strong sales momentum for Oreo, Ritz, Cadbury Dairy Milk, and Milka, with key innovations like Oreo’s Space Dunk campaign and a Post Malone collaboration driving engagement.
Market Performance: Emerging markets grew 6.2%, led by India, Brazil, and Mexico, while developed markets saw 3.2% growth.
Challenges: The company is managing cocoa cost inflation through strategic pricing and cost-saving initiatives, particularly in chocolate.
Market Insights
Consumer Trends: Demand for branded snacking products remains strong, despite macroeconomic concerns. Mondelez notes stable price elasticities in North America and Europe, with private label products losing market share.
Competitive Positioning: Mondelez is focused on premiumization and digital snacking growth, expanding e-commerce sales, and penetrating underdeveloped markets.
Strategic Initiatives
Product & Packaging Innovations: Introduction of new pack sizes and price points to maintain affordability amid inflation.
M&A Activity: Mondelez acquired a majority stake in China’s EVERT, a leading frozen-to-chilled baked snacks company, to strengthen its Asian market presence.
Sustainability Commitments: Over 90% of cocoa is now sourced through Cocoa Life, with carbon emissions cut by 38% from 2018 levels.
Forward Guidance
Revenue Growth: Mondelez expects 5% organic net revenue growth in 2025, supported by pricing actions and category expansion.
Profitability Pressure: Adjusted EPS is forecasted to decline ~10%, mainly due to record-high cocoa costs.
2026 Recovery: Mondelez anticipates EPS growth resuming in 2026, assuming cocoa prices stabilize or additional pricing measures are implemented.
The Bottom Line
Despite cocoa cost challenges, Mondelez continues to execute well, delivering strong revenue growth and maintaining brand strength.
Strategic pricing, portfolio expansion, and cost controls position the company for long-term success.
EPS pressure in 2025 is a key investor concern, but management remains confident in a 2026 recovery.
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