Mondelēz exceeds estimates, dividend raised
Mondelēz International (MDLZ) reported better-than-expected 2Q17 sales and earnings results. The company’s top and bottom lines exceeded analysts’ estimates despite the adverse impact of the recent malware attack. MDLZ stock rose 1.1% before closing at $44.10 on August 2, 2017.
Mondelēz increased its quarterly dividend by 16%, reflecting the company’s ability to generate strong cash flows. In 2Q17, the company returned about $0.9 billion to its shareholders in the form of dividends and share buybacks.
CEO to retire
Mondelēz announced that its longtime CEO, Irene Rosenfeld, would retire in November 2017. However, she plans to continue to serve as the chair of the company until March 31, 2018. Mondelēz International has chosen Dirk Van de Put, the current president and CEO of McCain Foods, to replace Rosenfeld as CEO. Rosenfeld has served as the company’s CEO since 2006.
The move follows the company’s dwindling sales performance. Mondelēz has reported sales declines in the past 15 consecutive quarters, including the recently announced 2Q17 results. In comparison, rival Hershey (HSY) continues to generate healthy sales growth driven by improved performance in the US (SPY).
In April 2017, the Wall Street Journal reported that Mondelēz was looking for a successor to its longtime CEO and had hired a recruitment firm. The company was under pressure from shareholders to improve its performance. Moreover, activist investors such as Bill Ackman and Nelson Peltz, who hold significant stakes in the company, had pushed for reforms.
Mondelēz posted its 2Q17 results on August 2. In this earnings series, we’ll analyze the company’s 2Q17 performance on the sales and profitability fronts. We’ll also look at the current analysts’ recommendations for MDLZ stock.