Confectionery giant Mondelez International has reported a 1.4% increase in first-quarter net revenue to $9.29 billion, compared to an 18.1% increase in the year-ago quarter, despite a ‘challenging and dynamic’ operating environment.
This demanding environment may be attributed to escalating cocoa prices due to global supply shortages, resulting in price hikes and shrinkflation.
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Addressing this matter while speaking to analysts following the publication of its financial results, Mondelēz CEO, Dirk Van De Put, remarked, “Although unexpected and transient, the cocoa inflation doesn’t diminish the resilience of our categories or the significant growth opportunities ahead.”
“It is evident that there is a great deal of discussion being generated by the record costs for cocoa ingredients & the consequent price increases that customers and consumers will face in the future,” he continued. Chocolate demand is still rising despite this short-term obstacle, and we are still fundamentally favoured in this expanding market with plenty of growth potential.
“Although adverse weather conditions and other factors impacting both supply and demand have propelled prices to unprecedented heights, we anticipate a market adjustment in due course.”
The $3.35 bn sale of its gum division to Perfetti Van Melle, stable product demand, and increased net pricing were the main drivers of the US confectionery giant’s 4.2% increase in organic net revenue for the three-month period.
Although the owner of Cadbury and Oreo raised its prices by 6.3 percentage points in the quarter, its volumes declined by 2.1 percentage points.
In Q1, Mondelēz’s Asia, Middle East, and Africa segment achieved a 0.6% increase in net revenue, contrasting with the 3.9% growth seen in Q1 2023 for the same region. Meanwhile, the company’s Europe business experienced a revenue growth of 1.8%, significantly lower than the 12.7% increase recorded last year.
In the first quarter, Mondelēz witnessed a 2.1% decrease in net revenue in North America, a significant drop from the region’s 26.8% growth in the same quarter of the previous year. Conversely, the company’s Latin America division posted an 8.9% increase, marking the highest growth among all of Mondelēz’s regions, yet notably less than the 46.6% growth reported for the region during the corresponding period last year.
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Van de Put remarked, “In the first quarter, we achieved strong top-line performance along with robust earnings and free cash flow generation, propelled by effective pricing strategies, efficient cost control, and momentum in emerging markets.”
He went on to say, “Despite encountering a challenging and constantly changing operational landscape, our teams remained steadfast and adaptable in adhering to our long-term growth strategy. We persist in reinvesting in our brands, expanding distribution channels, and leveraging synergies from recently acquired assets to foster sustainable long-term growth.”