Mondelez Planning to Buy License for Cadbury Biscuits

Mondelez International (MDLZ) has a market cap of $70.6 billion. It fell by 0.90% to close at $45.17 per share on July 20, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.94%, 2.6%, and 1.6%, respectively, on the same day.

MDLZ is trading 1.2% above its 20-day moving average, 1.8% above its 50-day moving average, and 5.4% above its 200-day moving average.

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 3.6% of its holdings in Mondelez International. The ETF tracks a market-cap-weighted index of stocks in the US consumer staples sector. The YTD price movement of FSTA was 10.3% on July 20, 2016.

The market caps of Mondelez’s competitors are as follows:

• PepsiCo (PEP): $157.2 billion
• General Mills (GIS): $42.9 billion
• Hershey (HSY): $22.7 billion

Currently, Mondelez International is in talks to buy the license for Cadbury biscuits from Burton’s Biscuits, a UK-based biscuit maker, for ~200 million pounds ($263 million).

Mondelez International reported 1Q16 net revenue of $6.5 billion, a fall of 16.8% compared to net revenue of $7.8 billion in 1Q15. Below are 1Q16 revenues for its regions compared to 1Q15:

• Latin America: 35.0%
• Asia-Pacific: 2.3%
• Eastern Europe: 21.3%
• Europe, the Middle East, and Africa: 23.1%
• North America: 4%

The company’s gross profit margin rose by 3.7%, and its operating income fell by 11.0% in 1Q16 compared to the prior year. Its net income and EPS (earnings per share) rose to $554.0 million and $0.35, respectively, in 1Q16 compared to $324.0 million and $0.19, respectively, in 1Q15.

Mondelez International’s cash and cash equivalents fell by 28.4%, and its inventories rose by 5.6% in 1Q16 compared to 4Q15. Its current ratio fell to 0.68x, and its debt-to-equity ratio rose to 1.3x in 1Q16 compared to 0.82x and 1.2x, respectively, in 4Q15. The company has repurchased ~$1.2 billion worth of its common stock at an average price of $41.04 per share. 

Mondelez International has declared a regular quarterly dividend of $0.19 per share on its Class A common stock. The dividend will be paid on October 13, 2016, to shareholders of record as of September 30, 2016.

The company has made the following projections for 2016:

• organic net revenue growth of at least 2%
• adjusted operating income margin of 15%–16%
• adjusted EPS growth in the double digits on a constant-currency basis

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