Mondelēz shrugs off supply chain and industrial woes in US to increase net income

The Cadbury owner’s net income was $4.3bn, equal to $3.06 per share on the common stock, up 21% from $3.56bn, or $2.48 per share, in 2020. Net sales were $28.7bn, up 8% from $26.6bn.

Dirk Van de Put, Mondelēz International Chairman and Chief Executive Officer, told investors and the media: “2021 marked another year of strong top-and bottom-line results despite a challenging macro environment.​

“We continued to execute well against our strategic growth initiatives with volume-led top-line growth, strong profitability, increased investments in brands and capabilities, and strong free cash flow generation. We further strengthened our portfolio with the addition of several growth accretive acquisitions, which increase our exposure to broader snacking categories and expanding profit pools."​

North America

North America results in the fourth quarter and for the full-year fell sharply due to the effects of an industrial dispute with its workforce, global inflation and supply chain challenges.

The adjusted operating income of the North American business in 2021 was $1.59bn, down 10% from $1.77bn in the year ended 31 December 2020.

Sales were $8.3bn, up 1.8% from $8.16bn in 2020. Fourth-quarter operating income in North America was $361m, down 20% from $453ma a year earlier, while sales were $2.19bn, up 0.6% from $2.18bn.

“Demand remains very robust, but our growth that you see is impacted by supply chain constraints and phasing of some of the price actions​,” Van de Put said in an earnings call with analysts.

“And so in between those is our inventory, of course. And if you look at North America, we grew or we were flat for the year, let’s say. But for a two-year CAGR (compound annual growth rate), we’re at 4%, which is still quite strong.​

“If you look at the last quarters, we had the strike in Q3, which left us with low inventory levels. And although improving, it’s going slower than you would normally expect because of all the supply chain disruption that everybody is experiencing. And so we think that we will still continue to see on shelf effects from the strike throughout Q1.”​

Van de Put said the pandemic continues to fuel the desire for comfort and indulgence, benefiting its categories and trusted brands.

“Overall, as we found in our State of Snacking Survey, the tendency for daily snacking is up for a third consecutive year. And although 70% of global consumers report concerns about inflation, it has done little to date to change their grocery shopping behaviour​.”

Looking ahead, the company should benefit from consumers’ trend to eat at home, Van de Put said. He cited data indicating 60% of US adults do not intend to eat out more in 2022 than they did in 2021.

While non-US markets enjoyed sales and earnings growth, Mondelēz said the challenges of inflationary pressures were not limited to North America.

“We are continuing to operate in a dynamic environment characterized by global input cost inflation alongside supply chain, labour and transportation disruption,” Van de Put said. “We are effectively mitigating these challenges through ongoing cost discipline and strategic pricing actions​.”

The company’s guidance for 2022 was issued “in the context of greater-than-usual volatility as a result of COVID-19​”, but said it expects growth rates in line with its long-term objectives of 3% organic revenue and high single-digit adjusted earnings per share growth with free cash topping $3bn.