NORTHFIELD, IL -- Mondelez International Inc.'s earnings dropped 29% in its first quarter as an independent company as spinoff-related costs squeezed the global snacks giant’s bottom line.
On Oct. 1, Kraft Foods Inc. completed the separation of its snacks business, now named Mondelez, and its North American grocery business, renamed Kraft Foods Group Inc. | SEE STORY
Mondelez's net income fell to $652 million, or 36¢ a share, in the three months ended Sept. 30. That compares with $922 million, or 52¢ a share, a year earlier. The latest period included 28¢ of spinoff- and restructuring-related per-share charges. Revenue dipped 2% to $12.9 billion from $13.3 billion.
Mondelez chief executive Irene Rosenfeld said revenue growth slowed because there was less of a benefit from price increases compared with a year ago. She also blamed the sales shortfall on "short-term executional missteps" in Brazil and Russia, two of the developing markets Mondelez is targeting for rapid growth, among other countries.
In Brazil, gum sales slowed during the quarter, but Mondelez did not act quickly enough and shipped too much product to the region. The company responded by ramping up advertising and promotions on gum and cutting back on marketing support for its biscuits, which hurt sales in that category. In Russia, coffee and chocolate sales volume fell because Mondelez did not cut prices as fast as some of its competitors.
Rosenfeld said the issues should be "largely resolved by the end of the year."
Revenue from emerging markets fell 6% in the quarter, hurt by the stronger dollar and the weakness in Brazil and Russia. It was offset by strong growth in China, India, the Middle East and Africa. In Europe, revenue dropped 8.1% hurt by the stronger dollar.
Revenue rose 1.9% in North America, helped by strong performance of such cookies and crackers as Honey Maid, Ritz, Triscuit and Oreo.
Meanwhile, Kraft Foods Group Inc., the maker of Maxwell House coffee and Oscar Mayer meats, posted a 13% increase in third-quarter earnings as cost savings allowed the packaged-food maker to boost sales by investing in more advertising behind its brands.