The company made strong progress against the strategies of accelerating consumer-centric growth
Mondelēz International has announced its fourth quarter 2019 results
Key Strategic Initiatives
The company made strong progress against the strategies of accelerating consumer-centric growth, driving operational excellence and building a winning growth culture in 2019. Some highlights included:
Global Brands & Local Jewels: accelerated an already strong Global Brands growth rate and transformed the Local Jewels growth rate, now at close to category levels. Overall, strongest market share performance since inception of the company, holding or increasing share in approximately 75% of our revenue base
Growth Markets & Channels: strong progress in fastest growing channels in developed markets including Europe discounters and biscuits in North America alternative channels; laid foundations for sustained future growth in key emerging markets like China, India and Russia
Everyday Executional Excellence: demonstrated best-in-class commercial execution including exceptional seasonal activation at Easter, Christmas and holidays around the world
Continuous Cost Improvement: delivered productivity savings across the business through cost discipline, strategic investment and operational excellence in procurement
Local-First Culture: created a local-first ecosystem with clearer accountability and focused incentives better aligned to the company’s growth strategy
Speed, Agility and Simplicity: brought innovations to market quicker through simplified processes and agile ways of working.
Full Year Commentary
Net revenues declined 0.3% driven by unfavorable currency impacts; Organic Net Revenue grew 4.1% with balanced volume/mix and pricing, strong performance in both emerging and developed markets, and accelerated growth rates on both Global Brands and Local Jewels.
Gross profit declined $15 million primarily due to unfavorable currency impacts. Margin was 40.0 percent, up 10 basis points, primarily due to lower Simplify to Grow program costs, partially offset by lower mark-to-market gains from derivatives. Adjusted Gross Profit1 increased $412 million at constant currency, growing 4.0% versus 2018. Adjusted Gross Profit margin was 40.0 percent, down 20 basis points primarily due to incremental costs from plant transition issues in Brazil and the highly inflationary environment in Argentina.
Operating income increased $531 million and margin increased 210 basis points to 14.9 percent, primarily driven by the lapping of prior-year pension participation changes, lower Simplify to Grow program costs and a gain on divestiture, partially offset by the expense from the resolution of a tax matter in 2019 and lower mark-to-market gains from derivatives. Adjusted Operating Income1 increased $189 million at constant currency, inclusive of increased investments in brands and route-to-market capabilities. Adjusted Operating Income margin was 16.5 percent, down 20 basis points as higher raw material costs and costs from plant transition issues in Brazil were mostly offset by pricing actions and lower manufacturing costs in all regions except Latin America.
Diluted EPS was $2.65, up 16.2%, primarily due to the benefit from Swiss tax reform and lapping the prior-year impact from pension participation changes, partially offset by lapping the prior-year gain on equity method investment transactions.
Adjusted EPS was $2.47, growing 8.3% on a constant-currency basis, driven by operating gains, as well as share repurchases, higher JV income, lower interest expense and lower taxes.
Capital Return: The company returned approximately $3 billion to shareholders with a balance of share repurchases and cash dividends.
Dirk Van de Put, Chairman and CEO said, “2019 was a major step forward for the company: Execution of our strategy, including investments in global and local brands, enabled us to deliver strong top-line performance and to meet or exceed all of our financial targets. We are increasingly confident that our incremental investments in brands and capabilities, emphasis on volume leverage and profit dollar growth will create a virtuous cycle that consistently delivers attractive top- and bottom- line growth and sustained free cash flow generation.”