US: Mondelez profit beats on lower costs, boosts buyback | Progresiv
Mondelez International Inc, the maker of Cadbury chocolate and Oreo cookies, reported a better-than-expected quarterly profit, helped by lower costs and raised its share buyback plan by 6 billion dollars. 
Mondelez said it expects organic net revenue to grow at least 3 percent for the year, up 1 percent from its prior forecast, boosted by price increases and higher spending on advertising.
The company will spend more to promote its products in markets such as Europe and India, where demand has been hit after it raised chocolate prices last year, Chief Executive Irene Rosenfeld said on a conference call with analysts.
Higher cocoa and dairy prices forced the company to raise the price of its chocolates and coffee in some markets, leading to a backlash from some retailers and customers.
The company is trying to woo customers in India by offering them more chocolate pack sizes at different price points, while price gaps with competing brands in Europe are narrowing as rivals have also been forced to raise prices, Rosenfeld added.
Sales in Europe, Mondelez's biggest market, fell 16.7 percent to 2.82 billion dollars in the second quarter ended June 30 from a year earlier.
Mondelez also said it would stop including results from its coffee operations from its next quarterly report. The business was spun off into a joint venture with Dutch group D.E Master Blenders to create the world's biggest standalone coffee company this month.
Mondelez said its buyback plan, under which it would now buy 13.7 billion dollars of shares, would expire on Dec. 31, 2018.
Mondelez has taken several measures to cut costs, including shutting factories and "zero-based budgeting," which requires managers to justify every expense in each new budgeting period.
Net income attributable to the company fell 35 percent to 406 million dollars, or 25 cents per share, in the quarter.
Net revenue fell for the seventh straight quarter to 7.66 billion dollars, down 9.2 percent from a year earlier, but beat the average estimate of 7.49 billion dollars. Organic net revenue, however, rose 4.3 percent, helped by the price increases. (www.reuters.com)
