Yahoo Finance Mondelez International Confirms 2016 Strategy and Outlook
Yesterday’s Consumer Pops: HRL, CAJ, MDLZ, and WHR
Price movement of Mondelez International
Mondelez International (MDLZ) has a market cap of $62.2 billion. MDLZ rose by 2.7% to close at $39.12 per share on February 16, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 7.7%, -5.4%, and -12.8%, respectively, as of that date.
Technically, the stock has broken the support and is trading below all moving day averages. Currently, MDLZ is trading 2.0% below its 20-day moving average, 7.1% below its 50-day moving average, and 7.7% below its 200-day moving average.
FSTA and PWC
The Fidelity MSCI Consumer Staples ETF (FSTA) invests 3.6% of its holdings in Mondelez International. The ETF tracks a market-cap-weighted index of stocks in the US consumer staples sector. The YTD price movement of FSTA was -1.4% as of February 12, 2016.
The PowerShares Dynamic Market Portfolio ETF (PWC) invests 3.5% of its holdings in Mondelez International. The ETF tracks a quant-selected, tier-weighted index covering the entire US equity market.
The market caps of Mondelez’s competitors are as follows:
PepsiCo (PEP)—$142.5 billion
General Mills (GIS)—$34.2 billion
Hershey (HSY)—$14.1 billion
Mondelez confirms its strategy
Irene Rosenfeld, Mondelez’s chairman and CEO, highlighted the company’s value-creation algorithm, which is built on two key pillars: growth and margin expansion. Rosenfeld stated that “by building our Power Brands, driving innovation platforms and expanding our distribution capabilities, we’re able to leverage our advantaged platform to grow revenue at or above the rates of our categories.”
Rosenfeld also stated that the company plans to “focus on expanding margins and delivering strong EPS growth by continuing to reduce our supply chain and overhead costs.”
Mondelez International’s performance in 4Q15 and 2015
Mondelez International reported 4Q15 net revenue of $7.4 billion, which represents a fall of 16.6% over its net revenue of $8.8 billion in fiscal 4Q14. Revenues from its Asia-Pacific, Eastern Europe, the Middle East and Africa, and Europe fell by 5.5%, 29.2%, and 31.8%, respectively. Revenues from its Latin America and North America markets rose by 1.5% and 2.1%, respectively, in fiscal 4Q15 over fiscal 4Q14.
Its net income and EPS (earnings per share) fell to -$729 million and -$0.46, respectively, in fiscal 4Q15, compared to $500 million and $0.29, respectively, in fiscal 4Q14.
2015 results
In fiscal 2015, MDLZ reported net revenues of $29.6 billion, which represents a fall of 13.5% YoY (year-over-year). The company’s cost of sales as a percentage of net revenues fell by 3.2%, and its gross profit margin rose by 5.4% in fiscal 2015. It reported operating income of $8.9 billion in 2015 compared to $3.2 billion in fiscal 2014.
Its net income and EPS rose to $7.3 billion and $4.44, respectively, in fiscal 2015, compared to $2.2 billion and $1.28, respectively, in fiscal 2014. The price-to-earnings and price-to-book value ratios of Mondelez International were 8.8x and 2.1x, respectively, as of February 16, 2016.
Projection
The company has made the following projections for fiscal 2016:
organic net revenue growth of at least 2%, including a headwind of up to nearly 1.3% from a combination of trade optimization and elimination of less profitable SKUs
adjusted operating income margin in the range of 15% to 16%
adjusted EPS of double-digit growth on a constant currency basis (currency translation would reduce adjusted EPS by ~$0.13)
This outlook reflects the current challenging external conditions, which feature slower economic and snacks category growth, as well as the volatile commodity cost and currency environments. For fiscal 2018, the company expects an adjusted operating income margin in the range of 17%–18%.
In the next part, we’ll look at Whirlpool.
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