Mondelez Tops Estimates After Cutting Costs, Boosting Prices

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Mondelez International Inc CEO Irene Rosenfeld
Mondelez International Inc Chief Executive Officer Irene Rosenfeld, said, “we remain intently focused on productivity and cost reduction to drive strong margin expansion and earnings growth.” Photographer: Chris Ratcliffe/Bloomberg

Mondelez International Inc., the maker of Oreo cookies and Ritz crackers, posted first-quarter profit and sales that topped analysts’ estimates after cutting costs and raising product prices.

Excluding some items, profit was 41 cents a share in the period, the Deerfield, Illinois-based company said Wednesday in a statement. That beat the 38-cent average of analysts’ estimates compiled by Bloomberg.

Mondelez, which generates about 80 percent of its revenue outside North America, has been keeping a tighter rein on expenses as it copes with the stronger dollar. Currency changes have eroded the value of overseas revenue, turning last quarter’s 3.8 percent in organic sales growth into a 10 percent decline.

“We’re starting to see a virtuous cycle in our business,” Chief Executive Officer Irene Rosenfeld said in an interview. “It’s coming from the fact that we’re managing our costs, which in turn allows us to expand margins and invest in growth.”

Mondelez shares rose 5.2 percent to $38.70 at the close New York. The stock has gained 6.5 percent this year.

The company also defused an activist fight last year. Investor Nelson Peltz joined the Mondelez board in 2014 after abandoning a proposal to merge the company with Pepsico Inc. Peltz’s Trian Fund Management, which owns about 2.9 percent of Mondelez, has pushed Rosenfeld to boost profit margins as growth has slowed in once-booming emerging markets.

Mondelez invested in a new factory in Russia last year and is building a $90 million plant in Bahrain. Rosenfeld also is working on a plan to reduce expenses by $3 billion by 2017.

Mondelez split in 2012 from Kraft Foods Group Inc. That company, which reported disappointing earnings on Tuesday, has agreed to merge with H.J. Heinz Co.

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