Emerging markets leading the way
- 3Q23 net revenue and EPS at US$9.0bn and US$0.82 respectively, beating estimates on pricing and volume/mix strength
- Revised FY23F guidance upwards for organic revenue growth and adjusted EPS growth to 14-15% and 16% respectively
- Optimistic on growth momentum continuing into FY24F with volume growth in underpenetrated emerging markets while pricing led growth is expected to ease
3Q23 EPS of US$0.82 – above market expectations, driven by strong pricing and volume/mix. Mondelez International (MDLZ) reported 3Q23 adjusted EPS of US$0.82 (vs est of US$0.78), up 13.9% y-o-y. Organic revenue for 3Q23 came in at US$9.0bn (vs est of US$8.8bn), up 16.4% y-o-, on +15.6 percentage points (% pts) increase in pricing and +3.8% pts increase in volume/mix. The company expects growth to ease in 4Q23 to about 7-10% based on revised guidance as pricing led growth eases. Nonetheless, pricing going into FY24F is expected to remain elevated due to high prices of various key input materials like cocoa and sugar. The impact of higher cocoa prices will likely be felt in 2H24F when its hedges come off.
Volume/mix growth in all region reason behind upwards guidance revision. Europe returned to positive growth post the resolution of negotiations with grocers on price increases, with all regions reporting positive volume/mix in 3-5% range. Overall strong volume/mix across all regions and demand resilience coupled with YTD performance prompted management to raise guidance of 12%+ organic revenue growth and adjusted EPS growth to 14-15% and 16% respectively, implying US$10bn revenue and US$3.41 EPS for FY23.
Optimistic of growth momentum to continue into FY24 with strength in emerging markets. Management indicated it is optimistic of FY24F on stable consumer confidence outlook for developed North America and Europe markets, and positive outlook for emerging markets. It highlighted strength in India and Mexico where volume grew double-digit YTD. It sees its shares as undervalued based on the cash flow generation capabilities of the company and aims to increase share repurchases in the coming quarters (US$660m in buybacks YTD vs expectations of US$2bn for FY23F).