Higher pricing drove organic sales
Mondelēz International’s (MDLZ) 2Q17 sales of $6.0 billion came in marginally above Wall Street’s consensus estimate but declined 5.0% YoY (year-over-year). The company’s 2Q17 top line was negatively impacted by a global cyberattack that delayed the company’s shipping and invoicing process. The malware attack adversely affected the company’s top line growth by 240 basis points.
Meanwhile, implementation of the GST (goods and services tax) in India further restricted the company’s top-line growth. Mondelēz International’s organic sales fell 2.7% YoY as lower volumes (-3.8%) more than offset higher pricing (1.1%).
In comparison, Kellogg (K), ConAgra Brands (CAG), Kraft Heinz (KHC), and General Mills (GIS) are also witnessing sluggish sales growth as a slowdown in consumption, mainly in the US (SPY), is taking a toll on their top-line performance figures.
However, Hershey (HSY) continues to report slow but steady top-line growth. In 2Q17, the company’s sales came out ahead of analysts’ estimate and increased 1.5% YoY. Hershey’s top line benefited from its healthy performance in North America. Higher net price realization and benefits from the barkTHINS brand acquisition drove the company’s sales growth.
Mondelēz’s management reiterated its sales guidance and expected a 1% improvement in its organic sales for 2017. The company’s planned innovative product pipeline for the second half of 2017 is projected to accelerate its sales growth.
The company launched Véa snacks and non-GMO Triscuit crackers in July 2017, which is expected to resonate well with consumers changing consumption trends toward healthy foods. Its well-being products such as Good Thins, Véa, and belVita are gaining market share and are expected to drive the company’s top-line growth in North America.
Mondelēz’s in-store activity and focus on the expansion of its distribution channels—including strengthening its digital arm and growing its presence in convenience stores and discount chains—are expected to supplement its sales growth.