DEERFIELD, ILL. – The relative strength of the global economy was reflected in Mondelez International’s results for the second quarter of 2018. The company posted sales growth of 3.3% and 0.2% in both developed and emerging markets. An eleven day truckers strike in Brazil that prevented the flow of product from reaching the market was to curb major sales growth in emerging markets.
“We remain encouraged by industry trends,” said Dirk Van de Put, Chairman and CEO, during a conference call with securities analysts on July 25th. “Snack growth is improving worldwide and our categories are up about 3%. It is particularly encouraging to see that this growth has come from both developed and emerging markets.
“As you know, we have a broad geographic presence and generate a significant portion of our sales outside of North America. We have a leading position in the highly attractive snacks category in most countries around the world due to our range of global and local brands. “
Mondelez net income for the second quarter ended June 30 was $ 323 million, equivalent to 22 cents per common share, compared to the same period last year when the company made $ 498 million, or 33 cents per share.
Revenue for the quarter increased from $ 5,986 million to $ 6,112 million.
One item that affected net income for the quarter was an increase in selling, general, and administrative expenses from $ 1,455 million a year ago to $ 1,904 million.
The company performed well in Mondelez’s two largest markets, North America and Europe. In North America, net sales increased 6.5% to $ 1,675 million. The overlap of a malware attack in fiscal 2017 that disrupted Mondelez’s supply chain was one reason for the quarterly improvement.
“Recent innovations like Oreo Thin Bites and Ritz Crisp & Thins have done well,” said Van de Put. “Our new innovation strategy is to start small, experiment and scale brands based on what we learn in local markets. An example of this would be Trident Vibes, which we launched in some markets in May. We are encouraged by our progress in North America with growing margins and improving trends in our US biscuit business. There is still much to be done, however. “
In Europe, sales increased 6.1% to $ 2,303 million.
“… We delivered another solid quarter of strong volume growth,” said Van de Put. “Our biscuit business saw strong volume growth in most of Western Europe, including Germany, France, Italy and Spain. Our chocolate brands Milka, Toblerone and Côte d’Or also performed well. And the Chocobakery, which also includes Milka and Cadbury biscuits, continued its dynamic.
“We continue to see strong chocolate growth in Eastern Europe, largely thanks to the strength of Milka. We also saw strong sales growth in Russia due to the continued success of the Alpen Gold Dark and Milka Dark launches as well as activations related to the World Cup. “
Management has raised its full-year 2018 outlook for organic net sales growth to the high end of the previous 1% to 2% range.
“We are encouraged by both the category growth trends and our own year-to-date sales growth,” said Brian T. Gladden, chief financial officer. “Both measures are better than our original expectations for the year. On the flip side, we see Brazil, which accounts for around 6% of our sales, as more challenging than expected.
“Looking ahead, I would like to remind you that comparisons are more difficult in the second half of the year given the comparisons of category growth and the positive impact of malware shipments in the previous year. We are maintaining the outlook for the year for our Adjusted Margin, Adjusted EPS and Free Cash Flow Commitments. “