Mondelez International sees margins drop in Q4 despite much higher pricing
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Mondelez International (NASDAQ:MDLZ) reported organic sales rose 15.4% in Q4, led by a a 37% jump for the Latin America segment and 19.5% increase in North America. Organic sales were up 24.7% for the emerging markets parts of the business during the quarter and were 10.5% higher for developed markets. Pricing accounted for 13.8 percentage points of the organic sales growth and volume/mix contributed 1.6 points of growth.
The food giant reported a drop in gross margin rate of 120 basis points to 36.0% of sales. Higher raw material and transportation costs and unfavorable mix were only partially offset by pricing. Operating margin was down 30 bps to 15.0% of sales vs. 14.6% consensus.
"We made significant progress against our strategy of accelerating growth and focusing our portfolio in the attractive, resilient categories of chocolate, biscuits and baked snacks, while continuing to invest in our brands and capabilities. We also continued to deliver strong marketplace execution amid challenging operating conditions and continued macroeconomic volatility." said CEO Dirk Van de Put on the quarter.
Looking ahead, MDLZ expects organic revenue growth of 5% to 7% for 2023 vs. +6.0% consensus and high single-digit adjusted EPS growth on a constant currency basis. Free cash flow of more than $3,3B is anticipated.
Shares of MDLZ traded flat in postmarket trading on Tuesday.
Read a recent breakdown on Mondelez International from Seeking Alpha author Prasanna Rajagopal.