In the heat of a turbulent year of soaring cocoa prices and political uncertainty, Mondelēz International managed to grow, though only just. However, its full year results for 2024 makes clear trouble is on the horizon.
This comes off the back of a substantial share earnings cut in December after analysts predicted strain on cocoa prices.
The company remained in growth overall with net revenue at 1.2%. However, that’s a considerable step down on last year’s 14.4%.
While revenues were up, a result of product price hikes, volumes declined in some areas by 1%.
Europe’s revenues were also up, by 3.5%, though weak against a mightier 12.6% in the previous year.
Mondelēz International believed its position in Europe was “stable”, with biscuits and chocolate growing, according chairman and CEO Dirk Van de Put.
Mondelēz results at a glance
- Mondelēz International's net revenue was $36.4bn for the year, an increase of 1.2%, compared to the previous year's increase of 14.4%.
- Organic net revenue grew by 4.3%, compared to last year's 14.7%.
- Volume/mix declined by 1%, compared to an increase last year of 1.3%.
- Diluted earnings per share (EPS) declined by 5.5%, compared to an increase of 84.7% the previous year. Adjusted EPS, meanwhile, grew by 13% compared to 2023's 19%.
- Chocolate had an organic revenue growth of 7.4%, while biscuits had one of 1.7%. Gum and candy 7.5%.
- In Europe, net revenues grew by 3.5%, and 3.1% in Asia, Middle East and Africa. They declined by 1.5% in North America and 1.6% in Latin America.
While Mondelēz International has managed to see some green on the books this year, the threat of rising cocoa prices is causing headaches for the financial year ahead.
Cocoa prices rose dramatically last year, lowered slightly later that year, and then rapidly rose again in December and January. They are yet to significantly fall from late-December highs.
With cocoa price hikes potentially the norm, Mondelēz International has a lot to contend with, considering a heft of its portfolio consists of great chocolate brands including Cadbury, Toblerone and Milka.
Though cocoa prices will eventually fall, according to CFO Luca Zaramella, that won’t be for some time and a forward strategy needs to consider some decline.
A focus on profit per-kilo will help to stem the decline, though Zaramella still predicts a 10% dip in 2025 due to cocoa pricing upheavals.
How much will cocoa prices affect future earnings?
This is a steeper decline than some analysts had predicted, with the London Stock Exchange Group (LSEG) expecting a dip of 6.7%.
And the outlook does not factor in potential tariffs from and to the US.
Though Van de Put offsets the gloom by stressing that consumers remain brand loyal, with very few straying away from Mondelēz products to private label.
He suggests that the company must protect price points, although if cocoa prices remain high, more pricing in 2026 may be required. ‘Multiple pricing waves’ is the best approach, suggests Zaramella, as it gets consumers ‘accustomed’ to increased prices. Eventually, he expects cocoa prices to fall.
In Europe, consumer confidence in chocolate is ‘subdued but stable,’ and better than in the US, he suggests.
Following the announcement that EPS may fall so significantly, Mondelēz saw its share price drop by almost 4% in after-hours trading.
However, not all voices are negative. US investment bank TD Cowen, for example, were positive in the long-term risk-reward profile due to its position in emerging markets, pricing power and position in attractive snacking categories.
