- By Mrinalini Chaudhuri

Mondel?z International Inc. (MDLZ) has a lot of prestige in the snacking industry with net revenue of approximately $30 billion in 2015.

It is a world leader in biscuits, chocolate, gum, candy and powdered beverages with billion-dollar brands such as Oreo, LU and Nabisco biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolate; and Trident gum.

• Warning! GuruFocus has detected 3 Warning Sign with MDLZ. Click here to check it out.

• MDLZ 15-Year Financial Data

• The intrinsic value of MDLZ

• Peter Lynch Chart of MDLZ

Mondel?z International is a member of the Standard and Poor's 500, NASDAQ 100 and Dow Jones Sustainability Index. It is one of the world's largest chocolate companies with a portfolio that includes Milka, Cadbury Dairy Milk, C?te d'Or, Lacta and Toblerone.

The company boasts of strong execution and first-half performance despite a challenging macro environment. The company continues to drive strong margin expansion on an adjusted basis. It has solid operating results year to date, lower-than-anticipated interest expense and strong results from the coffee joint venture investments.

Second-quarter results

Net revenue was down by 17.7%, driven by the deconsolidation of the coffee business, currency headwinds and deconsolidation of Mondel?z 's Venezuela operations.

Organic net revenue increased by 1.5%.

Gross profit margin was 39.9%, which marked a decrease of 10 basis points.

Adjusted gross profit margin was 40.1%, flat to prior year.

Operating income margin was 10.1% (a decrease of 90 basis points).

Adjusted operating income margin expanded 210 basis points and was 15.2%.

Diluted EPS was 29 cents, which marked an increase of 4 cents or 16.0%.

Adjusted EPS was 44 cents and increased by 4.5% on a constant-currency basis.

The company returned approximately $1.8 billion to shareholders through share repurchases and cash dividends through the first half of the year.

Expectations for 2016

Focus

• Operational efficiency.

• The company plans to invest for sustainable, profitable growth in Power Brands, white-space expansion and sales capabilities.

• Improving net productivity to world-class levels.

• Significantly reducing overheads.

• Expansion of a global shared services capability.

• It is enhancing the ingredient and nutritional profile of its base business while also introducing breakthrough innovations.

Expansion spree

Mondelez plans to double free cashflow by 2018. The company is embarking on strategies to accelerate growth, including a major foray into both the mainstream and premium segments of the U.S. chocolate category with its Oreo and Green & Blacks brands. It has expanded adjusted operating income margin by more than 450 basis points since 2013. It also delivered adjusted EPS growth at constant currency of more than 17% a year. It is targeting an adjusted operating income margin of 15% to 16% in 2016 and 17% to 18% in 2018.

Executive Vice President Brian Gladden said, "With expanding margins, lower capital expenditures, strong working capital performance and declining restructuring spend, we're on track to deliver free cash flow of at least $1.4 billion in 2016, and we expect to double that number in 2018."

The company is concentrating on the core portfolio through aggressive marketing and comfort snacks and driving sales, especially through ecommerce. It is working to become the global leader in well-being snacks by 2020.

It is planning to build an industry-leading ecommerce snacks business, targeting at least $1 billion in revenue by 2020. To achieve this, the company is building up experienced talent from leading ecommerce companies to drive stronger execution. During the first six months of this year, the company's global ecommerce sales increased by 30% while in China online sales have more than doubled.

It is also expanding cocoa life in Indonesia. Mondel?z International's ultimate goal is to sustainably source all the company's cocoa supply, mainly via Cocoa Life. By working with farmers, NGOs, suppliers and government institutions, Cocoa Life answers Mondel?z International's Call For Well-being, which urges employees, suppliers and community partners to join together to develop new approaches that can have a positive influence on the planet and its people. The Call For Well-being focuses on four key areas where the company can make the greatest impact: mindful snacking, sustainability, community and safety. (Source: Company's website)

There is great potential for the growth of the chocolate category in China. Mondel?z is entering China's $2.8 billion chocolate market.

Conclusion

The company's global power brands continue to be at a competitive advantage. It has made significant improvements in its marketing techniques and spending. In recent years, it has invested in expanding its brand presence across digital media and is focusing on ecommerce.

The company has been again named to the Dow Jones Sustainability Index (DJSI) for both the North America and World indices for the 12th consecutive year. Since the launch of the company in October 2012, Mondel?z International has delivered total shareholder return of 72%, which has outpaced both the S&P 500 and its consumer staples peers.

As a part of its focus on growth around the world, particularly in emerging markets, the company continues to invest in sales capabilities across key markets. Over the past few years, the company has built a strong presence in the snacking category. It expanded geographically and continued to invest in product quality, innovation and implemented series of cost-saving initiatives. The company is poised to grow; adding this company is going to reap shareholder returns.

Disclosure: I do not hold any position in the company.

Start a free seven-day trial of Premium Membership to GuruFocus.

This article first appeared on GuruFocus.

• Warning! GuruFocus has detected 3 Warning Sign with MDLZ. Click here to check it out.

• MDLZ 15-Year Financial Data

• The intrinsic value of MDLZ

• Peter Lynch Chart of MDLZ