DEERFIELD, IL -- Mondelez International Inc. beat Wall Street's quarterly expectations for the first time since its split with Kraft Foods Group last year. The maker of Oreo cookies, Trident gum and Ritz crackers earned $568 million, or 32¢ a share, in the first quarter, ended March 31. That was down from $813 million, or 46¢ a share, a year earlier, before the company spun off its North American grocery brands into Kraft Foods.
Excluding certain items, earnings were 34¢ a share, topping Wall Street estimates by a penny. Revenue rose nearly 1% to $8.74 billion, above the $8.68 billion Wall Street expected.
The company sold more snacks in emerging markets in its most recent quarter, but fell short of its long-term revenue growth targets, hurt by its gum business. Also impacting quarterly sales was lower pricing for its Maxwell House coffee, which Mondelez adjusted in line with lower commodity prices. (Mondelez sells Maxwell House overseas, while Kraft Food Group owns the coffee brand in North America.)
Mondelez gum brands like Trident and Stride continued to struggle in key developed markets during the first quarter, with a percentage of sales decline in the U.S. in the "high teens." Earlier this year, Mondelez chief executive Irene Rosenfeld blamed declines in the overall gum category partly on the industry's failure to emphasize its functional benefits in recent years.
Addressing Mondelez's first-quarter gum declines, Rosenfeld told analysts that the company is planning a new ad campaign touting the oral care benefits of gum. Rosenfeld also reported that new package sizes and prices began to yield improvement for its gum category in April. She added, however, that the company wasn't counting on a significant turnaround this year.
Mondelez said it still expects revenue growth for the year to be on the low end of its forecast of 5% to 7%. It raised its outlook for operating earnings to $1.55 to $1.60 per share, up from $1.52 to $1.57 per share.
Mondelez split from Kraft Foods Group Inc. last fall, expecting its global snacks brands to grow at a faster rate than the North American grocery brands like Oscar Mayer and Jell-O that Kraft kept. But Mondelez's sales have fallen short of its targets for its first few quarters as an independent company.
Last month, billionaire investor Nelson Peltz increased his stakes in both Mondelez and PepsiCo, fueling speculation that he may be laying the groundwork to push for a merger of the food and beverage giants.
Peltz is widely regarded as a key influence in the spinoff of Dr Pepper Snapple Group from Cadbury, Kraft's purchase of Cadbury, and the subsequent split of Kraft into Mondelez and Kraft Foods Group Inc.