Mondelēz’s strong UK sales prepares company for a no-deal Brexit

As Boris Johnson, the new British prime minster, announced the government is ramping up the funding for a no-deal Brexit if the country leaves on October 31 2019, the maker of Oreo and Cadbury Dairy Milk said its plans to stockpile raw ingredients, lease extra warehouse space, and contract more delivery trucks are in place for the second time this year.

Britain’s original scheduled departure from the European Union was supposed to be last March, until the EU agreed an extension due to the political turmoil in the UK.

Mondelēz is a "snacking powerhouse,​" CEO Dirk Van de Put said on an earnings’ call to analyst earlier this week, “that commands a large share of the chocolate, biscuit, and candy markets in the UK​.”

The company reported strong Easter sales in the UK​ helped its net revenues in Europe up 3.9% to $2.25bn in the second quarter.

Revenues

Mondelēz first instigated plans to minimize any Brexit-related disruptions at the end of last year​, in preparation for the UK leaving the EU in March.

"We are going to put the plan back in motion​," Van de Put said on the call. He remains confident that Mondelēz's UK production facilities will be able to handle all scenarios.

Chief finance officer Luca Zaramella said on the call: "There will be most likely an immediate currency devaluation on top of what we have seen these last couple of days. We will also see potentially inflation running up, which might hamper consumer confidence​.”

Cocoa

Zaramella also said a proposed new cocoa pricing mechanism announced by Côte d'Ivoire and Ghana at the beginning of July is causing cocoa costs to rise.

“It is fair to say that, given some of the proposals that are coming out of Côte d'Ivoire and Ghana, there is a spike in cocoa cost​,” said Zaramella.