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    MDLZ
    Earnings call· Mar 2025(Q1 FY25)

    Mondelez International, Inc. MDLZ

    Apr 29, 2025 Source

    Executive summary

    Mondelez Q1 FY25 — Solid Growth Amidst Cocoa Inflation and US Softness

    Mondelez delivered solid Q1 FY25 results, navigating significant cocoa inflation with strong pricing and strategic execution, particularly in its chocolate business. While North America faced softer consumer demand and retailer destocking, the company's diversified portfolio and emerging market strength provided resilience. Management remains confident in its full-year outlook, emphasizing agility and long-term category health through strategic reinvestment.

    Highlights

    5

    • Organic net revenue grew 3.1% despite external volatility, driven by strong pricing execution.

    • Generated $800 million in free cash flow for the quarter.

    • Chocolate business grew 10.1%, with broad-based brand growth across global and local brands.

    • Achieved a top-tier ranking on the global Advantage Survey for the first time in company history.

    • Expanded Cocoa Life program to source 91% of cocoa volume for chocolate business and reduced end-to-end carbon emissions by 12% vs. 2018 baseline.

    Concerns

    5

    • Volume/mix was down 3.5 points due to elasticity, Easter phasing, and retailer inventory destocking.

    • Adjusted gross profit declined 12% in dollar terms, significantly impacted by record cocoa costs.

    • Q1 adjusted EPS declined 18% in constant currency.

    • North America revenue declined 3.6% due to retailer destocking and softer consumer demand, particularly in food and mass channels.

    • India business declined high single digits, lapping a strong prior year and challenged by inflationary pressures and wage growth.

    Guidance & targets

    5
    CategoryTargetConfidence
    Organic revenue growth
    approximately 5%
    high materiality
    High
    Earnings per share (EPS) growth
    unchanged
    high materiality
    High
    Free cash flow
    unchanged
    high materiality
    High
    Net revenue and EPS impact from foreign currency
    no impact
    medium materiality
    Medium
    EPS growth
    growth
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Developed Markets
    Primarily due to strong pricing execution, with volume/mix decline on the back of retailer destocking and some chocolate elasticity.
    Volume/mix decline: 3.3%
    		—2.6%——
    Emerging Markets
    Driven by strength in Brazil, China, and the majority of Middle East and Africa businesses, with some softness in India and Southeast Asia.
    Volume/mix decline: 3.7%
    		—3.9%——
    Europe
    Excellent execution and growth in key countries like the U.K., France, and Germany. Strong pricing execution related to cocoa inflation, successful Easter season, and share gains. Volume declines driven by elasticity and RGM activities. OI dollars impacted by unprecedented cocoa inflation.
    		—8.9%—OI dollars down approximately 26%
    North America
    Primarily due to retailer destocking in the U.S. and softer consumer demand, especially in food and mass channels. OI decreased due to lower volume and cocoa inflation from Canadian chocolate business and U.S. biscuits.
    Total volume decline: 250 bps (due to retailer destocking)
    		—-3.6%—OI decreased by 18%
    EMEA
    China delivered strong mid-single-digit volume-led growth. India declined high single digits. Australia, New Zealand, and Japan delivered strong mid-single-digit top-line growth. OI dollars declined due to higher cocoa prices, partially offset by pricing and cost discipline.
    		—1.8%—OI dollars declined 8.3%
    Latin America
    Solid pricing execution. Brazil posted mid-single-digit growth. Mexico grew low single digits. OI declined largely due to increased cocoa inflation.
    Volume/mix decline: 2.5%
    		—3.9%—OI declined 12.4%
    Biscuits and baked snacks
    Brands like LU 7 Days, Prince, Club Social, Perfect Snacks, and Grenade delivered growth. Softer-than-expected results in U.S. biscuits due to retailer destocking and lower consumption.
    		—0.3%——
    Chocolate
    Significant growth across both developed and emerging markets. Broad-based brand growth from Cadbury Dairy Milk, Milka, Lacta, Côte d'Or, Freia, Marabou, and Hu.
    Volume/mix decline: 5.7% (driven by elasticities, RGM, and product outsizing)
    		—10.1%——
    Gum and candy
    Driven by gum in China and Mexico, and both gum and candy in Western Andean. Volume mix challenged by trade destocking in the U.S. and issues in Mexico.
    		—1%——

    Operational metrics

    17
    Organic net revenue growth
    3.1%
    Q1 FY25

    Driven by strong pricing execution across the chocolate business.

    Volume/mix
    -3.5
    Q1 FY25

    Consistent with expectations, also affected by one-time factors.

    Adjusted gross profit
    -12%YoY dollar terms
    Q1 FY25

    Solid top line growth and cost efficiency partially offset significant cocoa inflation.

    Adjusted EPS
    -18%YoY constant currency
    Q1 FY25

    Impacted by record cocoa costs.

    Share repurchases
    $1.5B
    Q1 FY25

    Repurchased stock at compelling prices.

    Cocoa Life program coverage
    91%
    Q1 FY25

    Expanded to source cocoa volume for the chocolate business.

    Carbon emissions reduction
    12%vs. 2018 baseline
    Q1 FY25

    Meaningful strides in combating climate change.

    New stores added
    100,000+
    Q1 FY25

    Expanded distribution around the world.

    Retailer inventory destocking impact
    60
    Q1 FY25

    Volume headwind to total company, primarily affecting U.S. biscuits.

    Retailer inventory destocking impact
    250
    Q1 FY25

    Volume headwind for total North American volumes.

    Chocolate volume/mix decline from RGM and outsizing
    3
    Q1 FY25

    Accounted for almost 3 points of decline in chocolate volume/mix.

    Chocolate share gain
    0.4
    YTD

    Continuing to innovate and gain share.

    U.S. biscuit share gain
    0.3
    Q1 FY25

    Driven largely by the launch of affordable formats like Fresh Stacks.

    Volume/mix decline from U.S. trade destocking and Easter phasing
    1.3
    Q1 FY25

    Part of the overall 3.5% volume/mix decline.

    Volume/mix decline from package downsizing
    1
    Q1 FY25

    Part of the overall 3.5% volume/mix decline.

    Cocoa supply increase
    10%vs. last year
    FY25

    Expected for the full year.

    Q1 grindings (proxy for consumption)
    -3% to -4%YoY
    Q1 FY25

    Indicating a decline in demand.

    Industry KPIs

    8
    MetricValueDetails
    Gross margin-12%%
    Brand platform growth—
    Organic net revenue growth3.1%%
    Adjusted EPS operating income-18%%
    Retailer trade negotiation statusvirtually all passed
    Volume mix vs pricing decomposition3.1%%
    Elasticity consumer response commentaryaround 0.5%%
    Category growth benchmark channel shift dataaround 3%%

    Product announcements

    4
    ProductTypeDetails
    Oreo Post Malone collaborationlaunch
    Cadbury Dairy Milk Biscoff barlaunch
    Oreo Selena Gomez promotionroadmap
    Fresh Stack (biscuits)launch

    Deals & partnerships

    1
    Lotus BakeriesChocolate collaboration for Cadbury Dairy Milk Biscoff bar

    Partnership to create co-branded chocolate products, starting with the Cadbury Dairy Milk Biscoff bar in the U.K. and expanding across Europe.

    Risks & headwinds

    6
    Record cocoa input costsQ1 FY25, ongoing for FY25

    Significantly impacted adjusted gross profit (down 12% in dollar terms) and EPS (down 18% constant currency)

    Mitigation: Strong pricing execution, aggressive RGM strategy, portfolio reconfiguration (pack sizes), cost savings program, opportunistic commodity procurement, long-term focus on category health.

    U.S. retailer inventory destockingQ1 FY25, partially continuing into Q2

    60 bps volume headwind to total company, 250 bps for total North American volumes

    Mitigation: Expects dynamic to partially continue into Q2, but Easter phasing will be favorable. Sharpening offers (e.g., Fresh Stack), improved in-store execution, increased distribution.

    Softer U.S. consumer demand and confidenceQ1 FY25, near-term

    Consumer confidence declined sharply in Q1, another 11% in April; biscuit category declined 1.5% in value

    Mitigation: Launching affordable formats (under $3), strong activations (e.g., Selena Gomez promotion), pushing multipacks for value, focusing on execution to gradually improve trajectory in H2.

    India business declineQ1 FY25

    High single digits decline

    Mitigation: Targeted activation, distribution gains, improving macro backdrop (income tax relief, interest rate cuts). Expects improvement beginning in Q2.

    Mexico economy slowingQ1 FY25, ongoing monitoring

    Low single digits growth for Latin America, with candy down in Mexico

    Mitigation: Monitoring and factoring into plans. Good movement on Oreo, Ricolino, and Philadelphia expected to accelerate growth.

    TariffsFY25, Q4 impact in North America

    Not particularly large, incremental to last call, factored into earnings outlook

    Mitigation: Vast majority of U.S. production is USMCA compliant. Stocking to go through Q2/Q3 for impacted ingredients. Negotiating with suppliers for more benign impact.

    What to watch in Q2 FY25

    5

    U.S. retailer destocking impact

    Q2 FY25
    Current60 bps volume headwind to total company in Q1
    Targetsubsiding, less impact

    Why it matters

    Retailer destocking significantly impacted North American volumes and overall company performance in Q1; its reduction is key for volume recovery.

    We expect the U.S. destocking dynamic to partially continue into Q2, while Easter phasing📎 will be favorable next quarter.

    Q&A highlights

    6

    Can you provide more detail on trends in key regions and how they will impact the rest of the year?

    Dirk highlighted strong execution in Europe with successful pricing negotiations and Easter performance, and continued strong performance in China and Brazil. North America was softer due to retailer destocking and declining consumer confidence, but biscuits are outperforming other snacks, and the company is gaining share with affordable formats. He emphasized agility due to mixed consumer sentiment globally.

    “I would say so far, so good, but it's still a long year, and we will need to stay very vigilant about shifts that we see at the level of the consumer.”

    asked by Andrew Lazar · answered by Dirk Van de Put

    2 min read5 chapters

    Detailed Narrative

    01

    Chocolate Strategy Execution Amidst Cocoa Inflation

    Mondelez's chocolate strategy is on track, with teams planning for record cocoa input costs over a year ago. The company has reconfigured its chocolate portfolio to offer a range of pack sizes, maintaining entry-level pricing to drive consumption. Most planned pricing in Europe has been successfully implemented with minimal customer disruption, and elasticity is in line with expectations. The company is also innovating with new flavors and formats, such as the Cadbury Biscoff product, which is currently the #1 selling SKU in the U.K.

    02

    North America Performance and Consumer Behavior

    North America experienced softer-than-expected results, primarily due to retailer destocking and declining consumer confidence, particularly among lower-income households. This led to lower frequency and value-seeking behavior, impacting the U.S. biscuits business. Despite the overall softness, the biscuit category is holding up better than other snacking categories, and Mondelez gained 0.3 points of share, partly driven by the launch of affordable formats like 'Fresh Stacks' under $3. The company expects destocking to subside and a gradually improving trajectory in the second half of the year.

    03

    Emerging Markets Resilience and Regional Dynamics

    Emerging markets demonstrated overall solid category growth in both volume and value, with Mondelez's share improving in biscuits and chocolate. China delivered strong mid-single-digit volume-led growth, while Brazil posted mid-single-digit growth in chocolate and biscuits. India, however, declined high single digits due to inflationary pressures, but is expected to improve from Q2 onwards through targeted activation and distribution gains. Mexico showed signs of slowing, which the company is monitoring.

    04

    Cocoa Market Outlook and Reinvestment Strategy

    While cocoa prices remain elevated, both spot rates and future curves have declined since the last quarter. Mondelez expects a small surplus for the year and anticipates meaningful demand declines due to elasticities from inflation-driven pricing and reformulation by non-chocolate players. The company's goal is to exit 2025 with minimal elasticity and strong gross profit dollars, positioning it to reinvest materially back into the chocolate category if cocoa prices come down, without taking shortcuts for short-term gains.

    05

    Sustainability Progress and Strategic Partnerships

    Mondelez made significant progress on its sustainability targets, expanding its Cocoa Life program to source 91% of cocoa volume and reducing end-to-end carbon emissions by 12% against a 2018 baseline. The company also strengthened retailer partnerships, achieving a top-tier ranking on the global Advantage Survey. These efforts are viewed as integral to long-term value creation and good business practice.

    AI-generated summary of the company’s earnings call. Not investment advice.