Mondelez products
Mondelez plans to heighten its power brands focus.

DEERFIELD, ILL. — Irene Rosenfeld, chairman and chief executive officer of Mondelez International Inc., is crystal clear about her expectations for the company’s North American biscuit business.

Irene Rosenfeld, Mondelez
Irene Rosenfeld, chairman and c.e.o. of Mondelez

“We had been outgrowing the category for quite some time, and it’s been a while since that’s been the case,” Ms. Rosenfeld said in a May 2 conference call with investment analysts. “So that’s what I’m looking to happen, and I think we have the assets to enable that.”

Net income at Deerfield, Ill.-based Mondelez 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%.

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 1.9% from $1,675 million.

Mondelez quarterly organic net revenue growth

In the call, Ms. Rosenfeld highlighted the U.S. biscuit business as a particular challenge for Mondelez.

“We have incredible, iconic brands, and we had very, very significant marketing support,” she said. “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.”

Ms. Rosenfeld said the concerns about biscuits in North America stand out against the broad success the company is enjoying in executing its strategies, both regarding its products and geographies. For example, the company’s power brands, including Oreo, Chips Ahoy!, Ritz, belVita, Cadbury, Milka, Halls and Trident, enjoyed 2.5% growth in the quarter, outpacing category growth.

Mondelez agreed to sell its Australian grocery business in January.

“A number of our key markets, including Russia, Germany, Southeast Asia and Mexico, delivered strong growth,” she said. “In addition, India rebounded faster than expected from the impact of demonetization, delivering high single-digit growth. In fact, except for North America, all regions delivered solid results.”

To heighten its power brands focus, Mondelez has been shedding other brands, and Ms. Rosenfeld said more such actions are pending and will be advantageous to the company.

“We expect to close two previously announced divestitures in Q2, our Australian Cheese and Grocery business and part of our French confectionery business, which, together, represent more than $500 million of revenue,” she said. “These deals are not only financially attractive, but they’ll also help us increase our power brands mix, improve our growth rate and expand margins as we eliminate the resulting stranded costs.”