Mondelez Misses Estimates After Currency, Economy Take Tollby
Mondelez International Inc., the maker of Trident gum and Oreo cookies, posted fourth-quarter earnings that missed analysts’ estimates as it grapples with the strong U.S. dollar and a shaky global economy.
Excluding some items, earnings amounted to 46 cents a share in the period, the Deerfield, Illinois-based company said Wednesday in a statement. Analysts estimated 48 cents on average. Sales fell 17 percent to $7.36 billion, though that topped the average analyst estimate of $7.27 billion.
The shares slumped 6.5 percent on Wednesday to close at $39.23 in New York, the biggest one-day decline in seven years. The stock is down 13 percent this year.
The dollar’s gains eroded the value of Mondelez’s revenue last quarter, and troubles in Venezuela led to a 48-cent expense. The results show the challenges facing Chief Executive Officer Irene Rosenfeld, who is revamping operations to adapt to slowing growth outside the U.S. -- where Mondelez gets most of its revenue. She’s cutting expenses by $3 billion and shifting production to lower-cost countries to streamline the business.
The company also is locked in a second recent tangle with an activist investor. Bill Ackman’s Pershing Square Capital Management disclosed a $5.6 billion stake in the snacks giant in August, less than two years after Rosenfeld beat back a push by Nelson Peltz.
Investors are watching to see if Rosenfeld can expand margins, which have trailed those of snack-food competitors. With Kraft Heinz Co. under the management of 3G Capital -- the famously thrifty private equity firm founded by Brazilian billionaire Jorge Paulo Lemann-- there is added urgency for Rosenfeld to cut costs and boost profit. 3G produced industry-leading margins at Heinz after taking the company private in 2013, then gobbled up Kraft Foods last year in a deal valued at $55 billion that was backed by Warren Buffett.