EEMEA: Net revenues increased 7.0 percent. Organic Net Revenues grew 13.0 percent, as strong volume/mix gains were partially offset by lower pricing, mostly from coffee in Eastern Europe.
Revenue growth was broad-based with double-digit gains in Russia, the GCC countries, Ukraine and West Africa. Russia continued to build momentum with high-teens growth behind exceptional volume/mix performance, partially offset by lower pricing in coffee and chocolate.
Power Brands grew 18.9 percent, led by Cadbury Dairy Milk and Milka chocolate, Barni, Oreo, Tuc and belVita biscuits and Jacobs coffee.
Europe: Net revenues increased 4.3 percent. Organic Net Revenues increased 1.9 percent, as strong volume/mix gains, particularly in biscuits, chocolate and coffee were partially offset by lower pricing in coffee and soft performance in gum.
Lower coffee revenues negatively affected the region’s growth by 1.4 percentage points. Power Brands grew 4.7 percent, led by Oreo and chocobakery biscuits, Cadbury Dairy Milk and Milka chocolate and Tassimo coffee.
North America: Net revenues increased 1.0 percent. Organic Net Revenues increased 2.4 percent, with strong biscuits and candy growth partially offset by lower gum revenues.
U.S. biscuits grew 5 percent or more for the ninth consecutive quarter. Power Brands grew 2.9 percent fueled by strong growth of Oreo, Chips Ahoy! and belVita biscuits and Halls candy.
September Year-to-Date Results
Net revenues were $25.8 billion, up 1.1 percent. Organic Net Revenues increased 4.3 percent, driven by strong volume/mix of 3.8 percentage points as well as favorable pricing of 0.5 percentage points. Lower coffee revenues tempered growth by 0.8 percentage points.
Power Brands grew 7.4 percent. Oreo, Chips Ahoy!, Tuc, Club Social, belVita, and Barni biscuits, Cadbury Dairy Milk, Milka and Lacta chocolate and Halls candy each posted double-digit increases.
Revenues from emerging markets were up 9.9 percent, led by double-digit gains in the BRIC markets.
Developed markets increased 0.7 percent as modest gains in North America and Europe were mostly offset by a low-single digit decline in Asia Pacific.
Market share performance was strong, with more than 60 percent of revenues gaining or holding share.
Performance was particularly strong in biscuits, with more than 75 percent of revenues gaining or holding share.
Operating income increased to $3.0 billion, up 10.6 percent, and operating income margin was 11.5 percent.
This includes a $336 million favorable impact from the reversal of an indemnity accrual related to the 2010 acquisition of Cadbury.
Adjusted Operating Income decreased 4.3 percent on a constant currency basis, including a negative 4.3 percentage point impact from prior year one-time items9.
Excluding these items, higher gross profit was offset primarily by increased investments in advertising, consumer support, sales capabilities and route-to-market expansion.
Adjusted Operating Income margin was 11.3 percent, down 1.4 percentage points, including the negative impacts of 0.5 percentage points from prior year one-time items and 0.3 percentage points due to the devaluation of the Venezuelan bolivar.
Diluted EPS was $1.23, including a $0.21 benefit from the indemnity accrual reversal.
Adjusted EPS was $1.12, including a negative $0.07 impact from currency. On a constant currency basis, Adjusted EPS increased 15.5 percent, reflecting a positive impact of $0.20 from lower taxes.
Net Debt and Share Repurchases
The company’s Net Debt as of Sept. 30, 2013, was $16.2 billion, up $0.6 billion from June 30, 2013. The increase was largely attributable to $0.7 billion of share repurchases in the quarter.
Through September 2013, the company has repurchased approximately $0.8 billion of its common stock at an average price of $31.13.
Outlook
The company lowered its 2013 Organic Net Revenue growth outlook to approximately 4 percent from its previous guidance of the low end of 5 to 7 percent to reflect the impact of weak biscuit sales in China, continued lower coffee prices and slower global category growth, especially in key emerging markets.
The company raised its 2013 Adjusted EPS target to $1.57 to $1.62 (at guidance currency rates) to flow through some tax favorability. Based on currency translation impacts recorded to date and spot rates as of Oct. 31, the company’s 2013 Adjusted EPS would be about 5 cents lower than the $1.57 to $1.62 guidance.
Conference Call
Mondelez International will host a conference call for investors with accompanying slides to review its results at 5 p.m. ET today. Access to a live audio webcast with accompanying slides and a replay of the event will be available at www.mondelezinternational.com/Investor.
