Oreo's climb gets steeper and steeper.
“The inflation environment is not easing at all,” Mondelez Chairman and CEO Dirk van de Putte told Yahoo Finance on Tuesday, amid better-than-expected first-quarter profits. Ta.
As Coca-Cola's CEO told Yahoo Finance earlier Tuesday, input costs for many products are normalizing, but Mondelez has been hit by soaring prices for certain raw materials, such as cocoa.
Rising costs have put the company in the unenviable position of forcing further price increases on shoppers. Van de Putt said the company could be forced to continue raising prices in 2024 to counter inflationary factors.
Van de Putte, which mass-produces Oreo cookies and Ritz crackers, says low-income consumers are starting to push back against soaring prices.
Van de Putte said this led Mondelēz to take a “cautious” approach to its full-year outlook today, repeating only an up and down outlook.
JP Morgan analyst Ken said, “As such, we expect street forecasts for this year and next to be lower (although it may not be enough for 2025, but we'll see). We recognize that the upside potential is relatively limited.” Goldman said in a client note Wednesday.
Revenue summary
-
Net sales: $9.3 billion, up 1.4% year-on-year, forecast to be $8.6 billion
-
Adjusted gross profit margin: 39.2% vs. 36.8% a year ago
-
Adjusted diluted EPS: $0.95, up 10.5% year over year, expected $0.83
Something else that stood out
-
Consumer backlash: Mondelez pushed for price increases across the board, resulting in underlying volume declines in all regions.
-
Here's where prices will rise: Emerging market prices rose 8.2% in the quarter, while developed market prices rose 5%.
-
Go big on stock buybacks: With its stock price down slightly year-over-year, Mondelez took advantage of the opportunity to buy back $568 million in stock in the first quarter. A year ago, the company bought back $399 million in stock.
-
No changes to full-year outlook: Despite a better-than-expected start to the year, Mondelēz still expected organic sales to increase 3% to 5% and adjusted EPS growth to be in the low single digits.
The main problem for shoppers: inflation
Inflation has been a thorn in consumers' minds since the pandemic, and it continues to be an issue impacting shopping carts. The consumer price index (CPI) in March rose 0.4% quarter-on-quarter, and compared with the same month last year he rose 3.5%. This accelerated from February's annual rate of increase of 3.2%.
Consumer inflation is accelerating, in part, as large food companies pass on their own higher input costs. For example, Coca-Cola (KO)'s price mix increased by 13% in the first quarter. Molson Coors (TAP) noted that its price mix rose 4.4% in the quarter.
Matthew Ruzzetti, chief U.S. economist at Deutsche Bank, said on a new episode of the Opening Bid podcast that inflation is likely to remain “sticky” in the near term, complicating future interest rate movements. (Watch below)
You can watch all episodes of Opening Bid on Yahoo Finance, YouTube, and Spotify.
Brian Sozzi I'm the executive editor of Yahoo Finance. He is also the host of “.starting bid” Podcast. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com. Are you a CEO and would you like to appear on Yahoo Finance Live? Email Brian Sozzi.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
