Jan 30 (Reuters) – Mondelez International (MDLZ.O) posted a rise in fourth-quarter sales on Tuesday, but price hikes took a toll on volumes as it squeezed demand for the Cadbury parent’s chocolates and salty crackers, sending its shares down more than 2% after the bell.
While price hikes have helped the Toblerone parent improve its profit margin through fiscal 2023, it is now starting to see softer demand as cash-strapped consumers cut back spending.
In the North America segment, Mondelez saw volume decline 5.5 percentage points (pp) in the fourth quarter owing to weaker biscuit sales and inventory control, down from a 4.6 pp rise in the previous quarter. Product prices in the region rose 7.4 pp.
The Ritz cracker maker said it “expects customer disruption during the first quarter and potentially into the second quarter” in Europe, owing to still-high inflation.
The company reported an overall volume decline of 0.4 pp in the quarter, joining other consumer staples firms such as McCormick (MKC.N) in facing the brunt of significant price increases.
“While other CPG brands that leaned on price hikes to drive growth had seen volumes decline in Q3, Mondelez managed to grow its volumes. But now Mondelez’s price hikes are catching up to it,” said Insider Intelligence analyst Zak Stambor.
Gross profit margin of 37.3% exceeded market expectation of 36.7%, but was lower than 38.7% it logged in the prior quarter.
Net revenue rose 7.1% to about $9.31 billion in the quarter ended Dec. 31 compared with $8.70 billion a year ago, meeting analysts’ average estimate, according to LSEG data.
Mondelez also joined Starbucks (SBUX.O) to flag a hit to its business due to the Israel-Hamas war.
“There is some tensions in the Middle East, and that has some effect on Western brands, and we have some of those Western brands,” Mondelez executives said in a post-earnings call.
For 2024, it projects organic net revenue growth of 3% to 5% and a high single-digit rise in adjusted profit per share on a constant currency basis.
Written by: Savyata Mishra @Reuters
The post “Cadbury-parent Mondelez Q4 sales jump, volume drop weighs on shares” first appeared on Reuters
BullsNBears.com was founded to educate investors about the eight secular bear markets which have occurred in the US since 1802. The site publishes bear market investing recommendations, strategies and articles by its analysts and unaffiliated third-party and qualified expert contributors.
No Solicitation or Investment Advice: The material contained in this article or report is for informational purposes only and is not a solicitation for any action to be taken based upon such material. The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this article or report does not constitute a representation that the investments or the investable markets described herein are suitable or appropriate for any person or entity.