Mondelez International Inc. says that bringing its European chocolate brand to the US and China will boost its sales next year, as the maker of Oreo cookies and Trident gum backs away from its plan to acquire US chocolate icon Hershey Co.
Mondelez reported that its profit rose 37% in the third quarter, excluding certain one-time events, sending its shares up about 3% in Wednesday's trading.
But uncertainties about the global economy and questions about Mondelez's deal aspirations prompted questions about how the company plans to boost sales after focusing the past few years on extreme cost cuts.
"There's no question the global environment has been kind of choppy," Chief Executive Irene Rosenfeld said. "Emerging markets have clearly been soft...North American consumers are slowly recovering."
In August, Mondelez ended its pursuit of Hershey, as the iconic chocolatier rebuffed the Oreo cookie maker's offer. Mondelez's months long takeover campaign would have created the world's largest candy company.
Now, Mondelez is relying on continued cost cuts and new product launches to hit the various benchmarks it has set with investors. Mondelez's comparable sales overall rose 1% in the latest quarter, while its adjusted operating margin a key metric indicating profitability rose to 15.8% from 13.6% a year ago.
New products here like Good Thins-similar to Mondelez's Wheat Thins, but made with rice, chickpeas or corn and a Milka chocolate and Oreo cookie bar coming out soon, are aimed at capturing a bigger share of snack sales.
Grocery stores are excited about the Oreo chocolate bars, Ms Rosenfeld said, "They're saying, 'can I have this next week?'"
Hershey, meanwhile, is also coming out with its own cookie-and-chocolate bars.
The US is the world's largest chocolate market at $14 billion in sales, and growing at 2.3% in recent years, and China's chocolate sales are about $2.8 billion, according to Mondelez.
While a couple percentage points of growth might not sound like much, many types of food in the US aren't growing sales at all, and some are even on the decline.
Mondelez and other big food compa¬nies continued to face challenges from a shift by US consumers toward foods perceived as healthier.
The snack maker also increasingly has looked to emerging markets for growth, which has hurt them recently because of the economic struggles in countries such as China and Brazil.
Mondelez said its earnings per share for the year will be 25% higher than last year, excluding one-time factors that affect comparability and the impact of currency fluctuations. Previously, Mondelez had simply projected "double-digit percent growth."
Over all, Mondelez reported a profit of $548 million, or 35 cents a share, down from $7.27 billion, or $4.46 a share, a year earlier. The year-earlier earnings were boosted by the company's interest in coffee maker Jacobs Douwe Egberts. Excluding items, adjusted per-share earnings rose to 52 cents from 38 cents.
Revenue decreased 6.6% to $6.4 billion. Analysts polled by Thomson Reuters expected per-share profit of 43 cents and revenue of $6.45 billion.■
