Mondelez International is a US-based multinational confectionary company that owns brands such as Cadbury’s, Oreo, Côte d'Or, Toblerone, Tuc, Chips Ahoy! and Halls.
The company reported Q3 2021 results on Monday, with net revenue for the period up 8% to $7.18 billion primarily driven by strong organic net revenue growth of 5.5%. The reported figure was $120 million above expectations.
The gross profit margin decreased by a significant 260 basis points to 39.3%, with higher restructuring and input costs proving a headwind. Diluted EPS was $0.89, up 14.1% while adjusted EPS was $0.71, up 9.4% on a constant currency basis.
Looking ahead for the full-year, Mondelez guided organic net revenue to rise 4.5% and adjusted EPS to grow by high single digits on a constant-currency basis.
· Year-to-date cash provided by operating activities was $2.7 billion, an increase of $0.4 billion versus the prior year, while free cash flow was $2.1 billion, an increase of $0.4 billion.
On a geographical basis, Latin America reported the highest organic growth, with revenue in the region growing by 25.9% in Q3 to just north of $750 million. Mondelez’s two largest markets Europe ($2.7 billion) and North America ($2.1 billion) grew by 4.6% and 0.3% respectively. Asia, Middle East & Africa recorded revenue growth of 5.7% to $1.6 billion.
Mondelez is a high-quality business with an outstanding array of brands. The company is projecting more than $3 billion in free cash flow for the full year, which places the company on 3.8% free cash flow yield at the current share price. Although this is on the rich side, the company does have significant investment opportunities and earnings are expected to grow at high single digit rates over the medium term, which in turn will likely see a low double digit growth rate in dividends. Over the last 5 years Mondelez have grown dividends at an average annual rate of 11% which, if sustained, justifies the relatively high valuation. Mondelez is a holding in the Cratos Worldwide Flexible Fund as well as Cratos Global portfolios.