DEERFIELD, ILL. — The largest challenge facing Mondelez International Inc. in North America is its biscuit business, which includes such brands as Chips Ahoy!, Nabisco and Oreo, said Irene Rosenfeld, chairman and chief executive officer. In a May 2 conference call with investment analysts, Ms. Rosenfeld said the company is dissatisfied with its performance in the North America market, in contrast to broad success she said the company is enjoying elsewhere.
Mondelez net income in the first quarter ended March 31 was $630 million, equal to 41c per share on the common stock, up 14% from $554 million, or 35c per share, in the same period a year ago. Net revenues were $6,414 million, down 0.6% from the same period a year ago. Organic net revenues (excluding the impact of acquisitions and divestitures) were up 0.6%.
In April, Tim Cofer was named interim president of the Mondelez North America business. Roberto Marques, the former president of the business, is leaving Mondelez. Ms. Rosenfeld said Mondelez has been losing market share in North America.
“Suffice it to say, we’re not satisfied with our performance in this region,” she said. “We’ve clearly made great progress on margins, but over the past few quarters, we haven’t delivered the type of top-line growth we expect. This is especially true in our U.S. biscuit business. While the environment continues to be quite challenging, we’re actively working to improve the trajectory of our U.S. business.”
Responding to an analyst who asked for greater clarity around the North American business, Ms. Rosenfeld focused even more strongly on the biscuit business.
“We have a very unique set of advantages in that (North American) market,” she said. “It starts with our D.S.D. (direct-store delivery) selling organization, but we have incredible, iconic brands, and we had very, very significant marketing support. And with all of that, I would expect us to be able to outgrow the category. So part of the challenge in North America has been that the category has been ... under some pressure. We own that category, and we need to figure out how to drive that category more aggressively. So I would say that’s the biggest issue in North America is our biscuit business. I do think that the work that Tim Cofer and the North American leadership team are focused on in the near term is exactly the right work, which is just blocking and tackling in terms of sales and marketing execution, making sure that we can capture the D.S.D. opportunity and making sure that we land that pipeline ... as well as the channel, extending the channel presence that we talked about.”
Operating income of the North America segment of Mondelez was $343 million in the first quarter, up 27% from $271 million in the same period in 2016. Net revenue was $1,648 million, down 1.6% from $1,675 million.
For the full year, Mondelez said it continues to expect organic net revenue growth of at least 1% and adjusted operating income margin in the mid-16% range. The company also is forecasting double-digit earnings-per-share growth.After the earnings announcement, shares of Mondelez International climbed $1.29, or 3%, closing at $45.03 per share in Nasdaq trading.