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Cadbury Owner Mondelēz's Profit Misses Estimates On Higher Raw-Material, Logistical Costs

Mondelēz International, Inc. narrowly missed Wall Street estimates for quarterly profit, as price hikes failed to offset the impact of higher raw-material costs and logistical expenses, due to supply chain bottlenecks.

The makers of packaged food have been struck by soaring shipping and labour expenses due to a strained supply chain, while surging demand for wheat, sugar and other commodities has driven up raw-material costs, crimping margins across the sector.

Margins Decline 

The Chicago-based chocolatier noted that its gross margin declined to 37% in the fourth quarter, from 39.4% a year earlier, sending its shares down about 3% in extended trading.

To offset the impact of higher costs, Mondelēz, like peers Conagra Brands and Kraft Heinz, resorted to price hikes, which – along with strong demand in emerging markets – helped boost its revenue.

The Cadbury chocolate-maker, however, warned of an eight-cent hit to its full-year adjusted earnings per share from foreign currency translation, adding that it would decrease net revenue growth by about 2.5%.

Revenue Increase 

Mondelēz’s revenue rose by 4.9%, to $7.66 billion (€6.87 billion), in the fourth quarter ended 31 December, topping analysts’ average estimate of $7.59 billion (€6.8 billion).

Excluding items, the Ritz cracker-maker earned 71 cents per share in the reported quarter, on a constant-currency basis, falling short of analysts’ estimate by 1 cent, according to Refinitiv IBES data.

Last month, the Oreo cookie-maker joined a growing list of US firms putting off their return-to-office plans, as COVID-19 cases surged across the country, due to the fast-spreading Omicron variant. It also recently announced plans to expand its sustainability efforts.

News by Reuters, edited by Donna Ahern, Checkout. For more A-brand news, click here. Click subscribe to sign up for the Checkout print edition.

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