Mondelez International Inc. (MDLZ), the snacks business spun off from Kraft Foods, reported Wednesday higher profit in its second quarter with margin expansion, despite weak revenues. Adjusted earnings per share beat analysts' estimates, while revenues missed view.
Looking ahead, the company backed fiscal 2014 earnings and margin forecast, while trimmed outlook for operating income and organic sales growth.
The maker of Oreo biscuits and Cadbury's chocolate reported that the second- quarter net earnings attributable to the company increased 3.5 percent to $622 million from last year's $601 million. Earnings per share grew 9.1 percent to $0.36 from $0.33 a year ago, with 5 percent higher share count.
Adjusted net earnings, which excluded certain items, were $691 million or $0.40 per share for the latest quarter, compared to $652 million or $0.36 per share a year earlier.
On average, 16 analysts polled by Thomson Reuters expected earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues were $8.44 billion, down 1.8 percent from last year's $8.60 billion. Analysts were looking for revenues of $8.65 billion.
In the quarter, improved revenue results in Europe and North America were more than offset by weak performances at Latin America, Asia Pacific and Eastern Europe, Middle East & Africa regions.
Organic net revenue grew 1.2 percent, including a 3.6 percentage point impact from pricing. Volume/mix declined 2.4 percentage points.
Organic net revenue from emerging markets was up 4.7 percent while developed markets decreased 1.2 percent.
The company's adjusted operating income margin expanded 120 basis points to 12.6 percent.
Further, Mondelez declared a regular quarterly dividend of $0.15 per common share of Class A stock, an increase of 7 percent.
The company said it is making good progress on the strategic and cost-reduction actions announced in May to strengthen core snacking business, simplify operations and enhance margins.
Looking ahead for fiscal 2014, Mondelez continues to expect adjusted earnings per share on a constant currency basis of $1.73 to $1.78. Analysts expect earnings of $1.72 per share for the year.
Including the currency impact, adjusted earnings are now expected to be between $1.64 and $1.69. Previously, the company projected adjusted earnings of $1.67 to $1.72 per share.
The company still expects adjusted operating income margin in high 12 percent range.
Meanwhile, Mondelez now projects adjusted operating income in high single-digit growth on a constant currency basis, compared to previously expected low double-digit growth.
The company also reduced 2014 organic net revenue growth target to 2 percent to 2.5 percent to reflect slower category growth and temporary pricing-related dislocation. The previous forecast for organic revenue growth was approximately 3 percent.
David Brearton, executive vice president and CFO, said, "Our top line remains challenged by a combination of weaker category growth and some temporary customer and consumer dislocations, as we lead pricing in many of our key markets and categories. We anticipate revenue growth to improve in the second half ...."
Mondelez further said it is on track to combine coffee portfolio with D.E Master Blenders 1753 in 2015.
In pre-market activity, Mondelez shares were losing $1 or 2.78 percent, and trading at $35.96.
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