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Mondelez International, the producer of beloved treats like Oreo cookies and Cadbury Dairy Milk, has again defied expectations with a promising Q2 revenue surge, thanks to the persistent consumer demand for sweets. Amid global supply chain disruptions and volatile food prices, the Chicago-based multinational is optimistically riding the wave of its core categories' success.
The company expects a 12% organic net revenue growth, surpassing the analyst estimate of 10%. This growth is attributed to the high demand for snacks which offsets the rising cost of goods. It marks the second consecutive quarter of growth for Mondelez International, as they previously increased their net revenue and earnings outlook by capitalizing on the demand for snacks and reducing their coffee equity stakes.
In the second quarter, net revenue rose by an impressive 17% to $8.51 billion, surpassing the predictions of approximately $8.21 billion. While global food prices increased due to extreme weather, the war in Ukraine, avian flu, and higher supply chain costs, U.S. grocery prices remained stable in June. Notably, the strong demand for snacks persisted despite these factors.
As the company delivered remarkable results, it experienced double-digit organic revenue growth across multiple regions, including Europe, Latin America, and North America, ultimately improving its margins during the quarter. Although Mondelez International faced some disruption in Europe due to expected retailer negotiations, it celebrated Oreo's significant success in China, one of the brand's most promising emerging markets. The executives on the call expressed great enthusiasm for the company's China business, particularly in the gum segment.
Despite the volume decline in Europe caused by the completion of price negotiations with retailers in line with expectations, Mondelez International remains confident in its performance. CEO Dirk Van de Put said their portfolio includes renowned brands like Ritz, LU, Clif Bar, Tate's Bake Shop, Milka, and Toblerone.
In response to these positive developments, the shares of Mondelez rose 1.65% in after-hours trading. Additionally, the Cadbury chocolate maker's shares increased by 2.7% during the same period, surpassing estimates for the second quarter.
Leading packaged-food companies, such as Hershey, Campbell Soup, General Mills (maker of Cheerios), and Nestle, have capitalized on strong demand to raise prices and protect their margins from higher raw material and transportation costs. Mondelez International has successfully followed suit, solidifying its position in the market.
Photo: SHAYAN IZADI ☄️/Unsplash
