Mondelez’s Revenue Expectations for Rest of Fiscal 2016

Sushree Mohanty - Author

Jul. 25 2016, Updated 11:04 a.m. ET

Revenue expectations

In its fiscal 1Q16, Mondelez International (MDLZ) reaffirmed the fiscal 2016 outlook it announced during its 4Q15 results. The company expects organic net revenue growth of at least 2%. This estimate includes a 125-basis-point headwind from trade optimization and elimination of less profitable SKUs.

The company now expects a currency headwind impact of three points on revenue, less than the six points expected earlier. This estimate is based on current exchange rates.

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Operating margin and EPS expectations

For 2016, Mondelez expects adjusted operating profit margin to be in the range of 15% to 16%, an expansion of 200 basis points compared to 2015. It expects the margin to be at the lower end of the range mainly because of an impact of a 50-basis-point headwind related to the deconsolidation of the company’s operations in Venezuela. The company also expects an operating margin of 17% to 18% in fiscal 2018.

Peer J.M. Smucker’s (SJM) EPS is expected to be $7.72 for fiscal 2017. ConAgra Foods’ (CAG) and General Mills’ (GIS) EPS is expected to be $2.41 and $3.11 for 2017, respectively. To gain exposure to Mondelez, you can invest in the First Trust NASDAQ-100 Ex-Technology Sector IndexSMFund (QQXT) and the First Trust NASDAQ-100 Equal Weighted IndexSMFund (QQEW). These funds invest 3% of their combined holdings in the stock.

Mondelez also expects adjusted EPS to deliver double-digit growth on a constant currency basis. The adverse effect of currency translation is now expected to be $0.05 down from the earlier estimate of $0.13.

Other expectations

The company expects interest expense to be around $625 million–$650 million and the full-year 2016 tax rate to be in the low 20% range.


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