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Packaged snacks company Mondelez (NASDAQ:MDLZ) missed analysts' expectations in Q2 CY2024, with revenue flat year on year at $8.34 billion. It made a non-GAAP profit of $0.86 per share, improving from its profit of $0.72 per share in the same quarter last year.
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Mondelez (MDLZ) Q2 CY2024 Highlights:
- Revenue: $8.34 billion vs analyst estimates of $8.45 billion (1.3% miss)
- EPS (non-GAAP): $0.86 vs analyst estimates of $0.79 (9.4% beat)
- Gross Margin (GAAP): 33.5%, down from 38.3% in the same quarter last year
- Free Cash Flow of $1.79 billion, up 74.3% from the previous quarter
- Organic Revenue rose 2.5% year on year (15.8% in the same quarter last year)
- Sales Volumes rose 2.2% year on year (0% in the same quarter last year)
- Market Capitalization: $90.01 billion
Founded as Nabisco in 1903, Mondelez (NASDAQ:MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.
Shelf-Stable FoodAs America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
Sales GrowthMondelez is one of the most widely recognized consumer staples companies in the world. Its influence over consumers gives it extremely high negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don't have).
As you can see below, the company's annualized revenue growth rate of 8.7% over the last three years was decent as consumers bought more of its products.
This quarter, Mondelez missed Wall Street's estimates and reported a rather uninspiring 0.1% year-on-year revenue decline, generating $8.34 billion in revenue. Looking ahead, Wall Street expects sales to grow 4.8% over the next 12 months, an acceleration from this quarter.
Volume GrowthRevenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Mondelez generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Mondelez's average quarterly volume growth was a healthy 1.3%. Even with this good performance, we can see that most of the company's gains have come from price increases by looking at its 11.5% average organic revenue growth. The ability to sell more products while raising prices indicates that Mondelez enjoys some degree of inelastic demand.
In Mondelez's Q2 2024, sales volumes jumped 2.2% year on year.
Key Takeaways from Mondelez's Q2 Results It was good to see Mondelez beat analysts' EPS expectations this quarter. On the other hand, its revenue missed expectations this quarter. Overall, this was a mixed quarter for Mondelez. The stock remained flat at $67.05 immediately following the results.
