Financial results

Power brands and emerging markets drive Mondelēz’s Q1 growth

03-May-2018 - Last updated on 03-May-2018 at 08:52 GMT

Mondelēz's power brands grew 8.2% in net revenues during Q1 2018. Pic: Mike Mozart

Mondelēz said its business in emerging markets outperformed the US during the first quarter of 2018, representing a growing global snacking trend.

The Oreo maker posted a net revenue growth of 5.5% and a 2.4% organic net revenue increase in Q1 compared to last year, reaching $6.77bn.

The emerging markets, which accounts for 40% of Mondelēz’s business, recorded a total net revenue of $2.58bn, increasing by 7.6% year-over-year, while the company’s developed market generated $4.18bn in total quarterly revenue, growing at 4.2%.

The CEO of Mondelēz, Dirk Van de Put, said the company’s positive growth benefited from the timing of Easter and Chinese New Year. “Our power brands performed well, including Cadbury Dairy Milk, Oreo and Milka. Each was up mid- to high-single digit,” he said.

Highlights of India, Southeast Asia and China

Van de Put noted Mondelēz gained shares and increased its sales volumes in some key emerging markets during the period.

“India was a standout, with revenue up double digits behind strong volume gains. We also increased distribution across the country and coupled that with improved in-store execution and a number of new product launches, such as Cadbury 5Star and Lickables,” he said. “The biscuit growth also continued to be strong, which was led by Oreo.”

India is not the only region where the power cookie brand hiked up Mondelēz’s sales.

Oreo innovation in Indonesia also drove the company’s Southeast Asia market to deliver its tenth consecutive quarter of growth, Van de Put noted.

China, on the other hand, registered mid-single-digit growth during Q1, he added. “China’s e-commerce net revenues doubled,” which contributed to another quarter of Mondelēz’s global e-commerce growth at 40%.

Blame gum mix and DSD for North America sales decline

Compared to Mondelēz’s mature markets like Europe that saw a 4.7% organic net revenue increase in Q1, North America experienced an organic net revenue decline of 1.8% due to “the challenging dynamics,” said Van de Put.

“The demands for our brands [in North America] were actually strong... our supply chain has had challenges effectively meeting all that demand,” he explained. “And this, along with our gum mix and overall trade destocking, drove the weaker revenue… the gum business [in particular] is still in decline.”

Van de Put also noted US retailers are decreasing inventories by switching to automatic systems – something Mondelēz’s DSD group cannot influence.

However, Mondelēz said it remains “bullish on the long-term strength” in the country.