After reporting better-than-expected quarterly results on Tuesday, Mondelez International Inc upped its sales projection for the whole year, as higher product pricing failed to dampen demand for the Oreo maker’s snacks and chocolates.
Packaged food manufacturers have steadily boosted prices on everything from cookies to beef jerky in order to maintain their margins from rising labour, ingredient, and transportation expenses without alienating consumers.
The Cadbury chocolate producer expects organic net revenue to increase by more than 8% in 2022, compared to its previous estimate of more than 4 per cent.
“While consumers (in developed markets) express growing frustration with rising prices for a broad range of goods and services, they continue to perceive chocolate and biscuits as affordable indulgences and an important pick-me-up,” Chief Executive Dirk Van de Put said on a post-earnings call.
According to Refinitiv IBES statistics, Mondelez’s net revenue increased by almost 10 per cent to $7.27 billion in the second quarter, exceeding predictions of $6.78 billion.
“Volume growth of 5% in the second quarter is impressive,” Credit Suisse analyst Robert Moskow wrote in a note.
Coca-Cola Co, McDonald’s Corp, and Unilever stated early Tuesday that their products were selling well despite price increases. more info
Luca Zaramella, Mondelez’s finance chief, said customers may begin to push back against price hikes, particularly in Europe, where inflation is more severe than in the United States, though this has had little influence thus far.
The price hikes served to mitigate the impact of a strong US dollar on the company’s earnings in the quarter.
The adjusted earnings per share was 67 cents, which was 3 cents higher than expected.
However, despite increasing its quarterly payout by 10 per cent, the business maintained its 2022 earnings forecast due to higher transportation, packaging, and food ingredient prices.
(Adapted from USNews.com)
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