DEERFIELD, ILL. — The relative strength of the global economy was reflected in Mondelez International’s second-quarter results for fiscal 2018. In both developed and emerging markets, the company experienced sales growth of 3.3% and 0.2%, respectively. Tamping down greater emerging market revenue gains was an 11-day trucker strike in Brazil that disrupted the flow of products from reaching the market.
“We remain encouraged by industry trends,” said Dirk Van de Put, chairman and chief executive officer, during a July 25 conference call with securities analysts. “Snacking growth is improving globally, and our categories are up about 3%. It’s particularly encouraging to see that this growth was coming from both developed and emerging markets.
“As you know, we have a broad geographic footprint and generate a significant majority of our revenue outside of North America. In the majority of countries around the world, we have a leading position in the highly attractive snacking category as we have a stable of iconic global and local brands.”
Mondelez’s net income during the second quarter ended June 30 was $323 million equal to 22c per share on the common stock, down from the same period of the previous year when the company earned $498 million, or 33c per share.
Sales for the quarter rose to $6,112 million from $5,986 million.
A line item affecting net income during the quarter was a rise in selling, general and administrative expenses to $1,904 million from $1,455 million the year prior.
In Mondelez’s two largest markets, North America and Europe, the company performed well. In North America, net sales rose 6.5% to $1,675 million. The lapping of a malware attack that occurred during fiscal 2017 and disrupted Mondelez’s supply chain was one reason for the quarterly improvement.
“Recent innovations like Oreo Thin Bites and Ritz Crisp & Thins have performed well,” Mr. Van de Put said. “Our new innovation strategy is to start small, experiment and bring brands to scale based on what we learn in the local markets. An example of this would be Trident Vibes, which we launched in a few markets this May. We are encouraged by our progress in North America with expanding margins and improving trends in our U.S. biscuits business. However, there is still more work to do.”
In Europe, sales rose 6.1% to $2,303 million.
“…We delivered another solid quarter with strong volume growth,” Mr. Van de Put said. “Our biscuit business delivered strong volume growth across most of Western Europe, including Germany, France, Italy and Spain. Our chocolate brands, Milka, Toblerone and Côte d'Or, also performed well. And chocobakery, which includes Milka and Cadbury biscuits, continued its momentum.
“In Eastern Europe, we continue to experience strong chocolate growth, largely thanks to the strength of Milka. We also saw strong revenue growth in Russia, fueled by the continued success of the Alpen Gold Dark and the Milka Dark launches as well as activations around the World Cup.”
Management raised its full year 2018 outlook for organic net revenue growth to the high end of the previous range of 1% to 2%.
“We’re encouraged by the category growth trends as well as our own revenue growth on a year-to-date basis,” said Brian T. Gladden, chief financial officer. “Both of these measures are better than our initial expectations coming into the year. On the other side, we see Brazil, which represents about 6% of our revenue, as more challenging than expected.
“Looking ahead, I’d remind you that the comparisons in the second half are more challenging given category growth comparisons and the positive prior year impact of malware-related shipments. With respect to our adjusted margin, adjusted e.p.s. and free cash flow commitments, we are maintaining outlook for the year.”