Profits for the third quarter have shot up at Mondelez International bolstered by sales of snack food in emerging markets as well as “power brands” like Oreo, Cadbury, Milka and Trident Gum. Reporting its Q3 results, Mondelez says net revenues increased 2.1 percent, organic net revenue increased 2.8 percent, while operating income margin was 18.1 percent, up 710 basis points.

Adjusted operating income margin was 16.9 percent, up 130 basis points, diluted EPS was US$0.65, up 86 percent and adjusted EPS1 was US$0.57, up 12 percent on a constant-currency basis.

There was a reported profit of US$992 million, topping earlier expectations.

“Were pleased with our improving revenue growth, driven by the strength of our power brands, continued momentum in emerging markets and Europe,” said Irene Rosenfeld, Chairman and CEO.  

“We posted another quarter of strong expansion in operating income margin and earnings. Were making good progress on many of our key strategic initiatives and remain confident in our ability to deliver long-term, sustainable growth on both the top and bottom lines.”

The current chief executive of Canadian frozen foods maker McCain Foods, Dirk Van de Put, is to succeed Irene Rosenfeld as the new Mondelez chief executive, as she steps down following a long-term association with the confectionery giant. Filling her shoes in November, Van de Put will be taking over as Rosenfeld retires. 

Third quarter commentary
Net revenues increased 2.1 percent, driven by organic net revenue growth and currency tailwinds. Organic net revenue increased 2.8 percent, driven by the continued strength of the company’s power brands as well as strong performance in Europe and emerging markets.

The company also realized an estimated net positive impact of 60 basis points from delayed shipments that moved to the third quarter as the company recovered from the malware incident.

Gross profit margin was 39.1 percent, an increase of 20 basis points, driven primarily by lower Restructuring Program implementation costs and favorable mark-to-market comparisons, partially offset by malware-related expenses. 

Adjusted Gross Profit margin was 39.5 percent, a decrease of 60 basis points, driven by higher input costs and selec trade investments in some key markets, partially offset by continued net productivity gains.

Operating income margin was 18.1 percent, up 710 basis points, driven primarily by the gain on divestiture, the benefit from resolution of a Brazilian indirect tax matter and lower Restructuring Program costs. Adjusted Operating Income margin increased 130 basis points to 16.9 percent, due primarily to lower overhead costs driven by continued cost reduction efforts. 

Diluted EPS was US$0.65, up 86 percent, driven primarily by the gain on divestiture, the benefit from resolution of a Brazilian indirect tax matter, lower Restructuring Program costs and operating gains.

Adjusted EPS was US$0.57 and grew 12 percent on a constant-currency basis, driven primarily by operating gains.

The company repurchased more than US$700 million of its common stock and paid approximately US$300 million in cash dividends. 

Outlook
For 2017, the company now expects Organic Net Revenue growth to be approximately 1 percent given the larger than expected impact from the malware incident. The company still expects Adjusted Operating Income margin in the mid-16 percent range and double-digit Adjusted EPS growth on a constant-currency basis. The company estimates full-year currency translation would not result in a change to net revenue growth or Adjusted EPS3.

In addition, the company still expects Free Cash Flow of approximately US$2 billion.