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Mondelez International Inc Class A MDLZ

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Economic Moat




While North America Remains Sweet, Emerging Markets Sour for Mondelez in Q2; Shares not a Bargain

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

The travails of the pandemic started to emerge in wide-moat Mondelez’s second-quarter results, as underlying sales edged up a mere 0.7% over the prior-year period--a marked stepdown from the 6.4% organic levels posted in the first quarter--while adjusted gross and operating margins deteriorated to the tune of 90 and 80 basis points, respectively, to 39.7% and 15.9%. The sales corrosion was concentrated in emerging markets (30% of sales, down 5.1%), attributable to the closure of the traditional trade channels in several countries including Mexico (in line with sentiment from peers). Further, the profit hit reflects the incurrence of more than $130 million in costs (labor, safety, sanitation, and supply chain) stemming from COVID-19.

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Company Profile

Business Description

Mondelez has operated as an independent organization following its split from the former Kraft Foods North American grocery business in October 2012. The firm is a leading player in the global snack arena with a presence in the biscuit (44% of sales), chocolate (32%), gum/candy (13%), beverage (4%), and cheese and grocery (7%) aisles. Mondelez's portfolio includes well-known brands like Oreo, Chips Ahoy, Halls, Trident, and Cadbury, among others. The firm derives just over one third of revenue from developing markets, a similar level from Europe, and the remainder from North America.

Three Parkway North
Deerfield, IL, 60015
T +1 847 943-4000
Sector Consumer Defensive
Industry Confectioners
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type High Yield
Employees 80,000