Mondelēz reports strong earnings, expects profit hit in 2025 over cocoa prices

Cadbury and Oreo maker Mondelēz International has on Wednesday announced its fourth quarter and full-year 2024 financial results, highlighting robust revenue growth, strong earnings, and significant shareholder returns despite ongoing economic challenges.

The company, however, said it expects a 10 per cent hit on its profits this year over increased cocoa prices.

Key financial highlights for the full year 2024 include:

• Net revenues increased 1.2 per cent for the full year 2024, driven by 4.3 per cent organic net revenue growth and contributions from the acquisition of Evirth, offset by currency-related items and the 2023 divestiture of the developed market gum business.
• Gross profit rose by $493 million (£393m), with a 90-basis-point margin increase to 39.1 per cent due to higher pricing and productivity gains, offset by rising raw material and transportation costs.
• Operating income increased $843m, with an operating income margin of 17.4 per cent (up 210 basis points), benefiting from lower integration costs and favourable hedging activities.
• Diluted EPS was $3.42, reflecting a 5.5 per cent decrease due to lapping prior-year gains and costs associated with the ERP Systems Implementation program.
• Adjusted EPS grew 13.0 per cent on a constant currency basis to $3.36, driven by strong operating performance, share repurchases, and lower taxes.
• Shareholder returns amounted to $4.7 billion through dividends and share repurchases.

“Fiscal 2024 was another strong year of performance for our company. We delivered balanced top-line growth, strong earnings, and robust free cash flow generation, while returning significant capital back to shareholders," said Dirk Van de Put, chair and chief executive of Mondelēz International.

Mondelēz saw notable improvements in the fourth quarter despite rising costs. Net revenues increased 3.1 per cent, with 5.2 per cent organic net revenue growth offset by currency impacts.

Gross profit rose $241m in the quarter, with a 130-basis-point increase in gross profit margin to 38.6 per cent, and operating income climbed $418 million, raising the operating income margin to 16.8 per cent (up 400 basis points).

Looking ahead, Mondelēz said it faces challenges from record-high cocoa prices but remains committed to its long-term strategy. The company expects organic net revenue growth of approximately 5 per cent and adjusted EPS to decline by approximately 10 per cent on a constant currency basis due to cocoa inflation.

“As we transition into 2025, we remain focused on executing against our long-term growth strategy and delivering on our chocolate business playbook to navigate unprecedented cocoa cost inflation,” Van de Put said.

“Our teams are well-equipped to stay agile and take the necessary actions to navigate this challenging operating environment. We believe we are solidly positioned for attractive long-term top- and bottom-line growth.”

Cocoa prices soared 161 percent last year, reaching $10,100 per tonne in mid-December before easing to $9,165 at the end of 2024.

Last month Swiss chocolate maker Lindt & Spruengli said it would raise prices again in 2025 after strong sales last year showed that increases had not cut the appetite of consumers.

The group had already hiked prices by “mid-single” digits last year to offset the rising costs of cocoa.