Mondelēz International Inc topped market expectations for quarterly results, boosted by resilient demand for chocolates and snacks, but warned its European business could take a hit in the current quarter from price hikes.
Packaged food makers have steadily raised prices to protect their profits from rising costs amid little to no pushback from consumers, who are willing to pay more for their favourite brands instead of trading down to cheaper alternatives.
“We made significant progress against our strategy of accelerating growth and focusing our portfolio in the attractive, resilient categories of chocolate, biscuits and baked snacks, while continuing to invest in our brands and capabilities," said Dirk van de Put, chief executive.
"We also continued to deliver strong marketplace execution amid challenging operating conditions and continued macroeconomic volatility."
Energy Costs In Europe
While that helped Mondelēz record a surge in quarterly revenue from North America and Latin America, its European business took a hit from soaring energy costs in the region.
The Cadbury chocolate maker said it had announced another round of price hikes in Europe, which could hurt its first-quarter margins as retailers push back against the move and the disruption "might also continue" into the second quarter.
Still, the company forecast its 2023 adjusted per-share profit would grow in the high single-digit range on a constant currency basis. Analysts on average had expected it to rise 6.1% to $3.11, according to Refinitiv data.
Chicago-based Mondelēz recorded a 23.3% surge in revenues from its emerging markets amid strong demand in countries including Brazil, China and India, while its developed market revenues jumped 8.2% in the fourth quarter.
The Toblerone maker projected 2023 organic net revenue growth of 5% to 7%, also benefiting from its recent acquisitions of energy bar maker Clif Bar and Greek food firm Chipita.
"It was a good quarter, with better-than-expected sales growth across all geographies... Consumers appear to be accepting the higher prices, given the healthy increase in the number of products sold," said Edward Jones analyst Brittany Quatrochi.
Net revenues rose 13.5% to about $8.70 billion (€8.0 billion) in the three months ended December 31, beating Refinitiv estimates of $8.33 billion (€7.66 billion), while adjusted profit of 73 cents per share also topped expectations.