Mondelez Is Going For The Pastries

Mondelez International Inc MDLZ is on track after reporting a strong second quarter. With sales rising 12.4% and profit coming in higher than expected, the confectionery giant is going on an acquisition spree that rolled with its $2 billion acquisition of Eastern European baked goods company Chipita in May.

Second Quarter Figures

The snack maker earned a quarterly profit of 77 cents per share, 8 cents a share above estimates with revenue also topping Wall Street expectations as consumers stocked up on snacks such as Cadbury, Milka, Lacta, and Toblerone, especially in international markets. Net revenues climbed 12.4% to $6.64 billion.

Increased mobility fueled the gum and candy business to double-digit growth that grew 28% during the quarter. However, the segment declined over 7% on a two-year basis.

CEO and chairman attributed the gains to the company's strategy that focuses on volume-led growth and profit dollar as opposed to cost and percentage margin. He also praised the company's adoption of a simplified local-first commercial model in which decisions are made by being closer to the end-consumer.

Oreo Café

On August 3^rd, the company opened its first Oreo café in East Rutherford, marketing it as a new, immersive, and personalized experience for all Oreo lovers with the exclusive not-so-secret item named Oreo Donut S'Morewich that consists of an explosion of flavors of Oreo, ice cream, waffle, marshmallow, glazed donut, fudge, and sprinkles.

2021 Christmas Range Unveiled

The company just revealed its 2021 Christmas range that includes Cadbury, Green and Black's, Maynard Bassetts, and of course, Oreo. Chocolate is a key category at Christmas, so it's essential retailers prepare their range early to maximize their shoppers' seasonal spend, with the festive opportunity beginning in September and running to the end of December. It consists of four stages to make the most of the season or in other words,  to enable retailers to stock the right range at the right time.

Guidance

Mondelez predicted strong sales for the remainder of the year despite inflation and other headwinds. Full-year organic revenue guidance was raised from 3 to 4% but full-year profit guidance remained unchanged, despite a 12.9% increase in gross profit that outpaced net revenues.

Headwinds

Headwinds are present in the form of cost inflation that is impacting the whole foods sector, along with logistics and freight costs. Cost inflation ended up being even higher than the company anticipated at the beginning of the year. The pandemic continues to shape consumer behavior and therefore, the company's success.  But Mondelez aims to enter 2022 with sound profitability that will enable higher investment in 2022.

The Road Ahead

Renovation and innovation of core products remain the key focus, such as finding new flavors. Reshaping the portfolio, combined with other revenue growth management strategies, including pricing and simplification to offset inflation are all parts of the strategy, along with focusing on snacking to accelerate the business' long-term growth rate. In simple words, Mondelez is on track after it added croissants to its confectionery empire.

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