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Mondelez’s Revenue Missed Estimates for a Seasonally Weak 2Q16

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Revenue declined and missed estimates

Mondelez International’s (MDLZ) revenue for 2Q16 fell 18% YoY (year-over-year) to $6.30 billion—compared to $7.66 billion in 2Q15. Lower revenues for the quarter were led by currency headwinds and deconsolidation of the coffee business and the company’s Venezuela operations. After asurpassing estimates for the last five quarters, the company missed revenue estimates of $6.4 billion in 2Q16.

However, its organic net revenue rose by 1.5% for the quarter. Continued improvement in overall volume and mix trends and better pricing to recover currency-driven input costs in inflationary markets helped the increase in organic revenue.

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What drove the 2Q16 performance?

Currency-driven pricing in markets like Argentina and Russia helped the emerging markets performance, while developed markets’ results were flat. However, developed markets had a positive quarter of volume and mix. They continued to expand margins. The chocolate business in the United Kingdom, Germany, Australia, and India, biscuits in Europe, and the gum and candy business globally showed improvements in the second quarter. Aggressive trade promotion had a negative impact on US cookies and the Brazil business. The company grew its e-commerce revenue by more than 30% in 1H16.

Peers’ performance

Mondelez’s peers in the industry include Hershey (HSY), Kellogg (K), and Kraft Heinz (KHC).

  • Hershey will report its fiscal 2Q16 on July 28. Revenue is expected to rise by 2%.
  • Kellogg will report its fiscal 2Q16 on August 4. Revenue is projected to fall by 4%.
  • Kraft Heinz will report its fiscal 2Q16 on August 4. Revenue is expected to fall by 5%.

To gain exposure to Mondelez, you can invest in the Fidelity MSCI Consumer Staples Index ETF (FSTA) and the iShares U.S. Consumer Goods ETF (IYK). They both invest 3.1% of their respective holdings in Mondelez.

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