Mondelēz International has reported net revenue growth of 4.9 per cent in its third quarter, driven by strong organic net revenue growth of 4.4 per cent.
Dirk Van de Put, Chairman and Chief Executive Officer of Mondelēz International, said that Q3 was a strong quarter across all three key metrics, despite challenges presented by the COVID-19 pandemic.
“We are holding or gaining share in over 80 per cent of our revenue base.
We had good momentum on shares coming into the pandemic and I am satisfied that we have sustained share gains beyond the initial phase of the crisis. This demonstrates the strength of our brands and our supply chain.
“Our Gross Profit dollars grew strongly at six per cent despite the incremental COVID-related costs. Operating income grew strongly at 10.5 per cent despite the significant increase in our brand investments.”
Mondelēz International continued to improve free cash flow generation, delivering $1.7 billion year to date, up $0.5 billion versus the same period last year.
Performance drivers
Van Puth told shareholders that execution was strong in the third quarter and acceleration of strategic initiatives led to growth across all regions.
“We continued to manage successfully during uncertainty and COVID-related challenges and as a consequence we are outperforming our categories, continuing to gain significant market share.
“While our category outperformance is in most markets around the world there are very diverging markets and category situations, depending on how they are affected by COVID dynamics.
“Our largest categories, biscuits and chocolates, continue to perform well. Gum is still under significant pressure due to changes in consumer mobility and habits. And candy while initially under pressure, also improved. Meals and powdered beverages continue to do as well. Demand remained elevated in developed markets and we saw sequential improvement in emerging markets.
“In developed markets, where more of our business is in the grocery channel and our gum business is also smaller, we continued with good momentum. In emerging markets, the majority of our markets grew in Q3, including key markets such as India, China, Brazil and Russia.
“But conditions do vary and some markets are still challenged, particularly where our portfolio skews towards gum and candy or where our sales are mostly in the traditional trade, which is mainly in Latin America, the Middle East and Africa.”
Long-term strategy
Van Puth said that Mondelēz International’s long-term strategy remains unchanged, but some initiatives have been accelerated during the crisis, including a 25 per cent reduction of SKUs.
“We are on track to be 75 per cent through our SKU reduction exercise by year-end. Our teams are focused on ensuring that we don’t lose shelf space or incur any waste, while increasing sales, reducing inventory and increasing line efficiency.
“I do want to reiterate that while 25 per cent SKU reduction sounds like a big number, this represents a very small percentage of our revenue.”
The business is also stepping up media investments in the second half of the year, with a stronger focus on digital for the first time.
“We are seeing good results from this increase of investment, for example, as one proof point, our market share momentum continues in Q3.
“Our ROI on this investment has increased significantly and we now rank in the top tier in our industry.
“Interesting to note is that we are skewing our spend to digital even more and for the first time this year we will be spending more on digital than on TV.
“Our long-term growth strategy remains unchanged, but during this crisis we have accelerated certain initiatives in order to emerge stronger and build further on our advantage position.”