Dive Brief:
- Mondelez International beat Wall Street expectations but still posted a revenue loss in its first quarter earnings report, with net revenues down 0.6% to $6.4 billion from the previous year.
- Most of the revenue growth came from Latin America, which posted 11.4% growth since last year. Meanwhile, North America saw a notable 1.6% revenue decrease.
- The company's earnings were buoyed by its "power brands" — which include Oreo, Chips Ahoy!, Ritz, belVita, and Cadbury. The snacking giant's power brands posted a 1.6% increase in revenue over last year's first quarter, a total of $4.7 billion.
Dive Insight:
Mondelez Chairman and CEO Irene Rosenfeld started off the earnings report by praising the "solid start" to 2017 in spite of "challenging market conditions." In the earnings call on Tuesday evening, she explained what she meant by challenging conditions: Consumers' increasing desire for healthy food.
"The accelerating growth of well-being products is one of the biggest shifts facing our industry, and we're addressing this with urgency," Rosenfeld said. "As we enter the back half of 2017, we have an unprecedented pipeline of innovation, including new items like Véa as well as renovation of existing products like Triscuit."
A focus on innovation and better leverage of the company's capabilities will help Mondelez build on its start to the year and move more into the higher profit category, she said.
As the snacking giant works to make its portfolio healthier, it's also working to get its products in more places. This includes getting more products in convenience stores, which are seeing record sales of grab-and-go food and snack items. During the call, Mondelez execs talked about new packaging capabilities in its factories, enabling the company to more easily make smaller packages of healthier products like belVita Protein biscuits for convenience stores and extra-large boxes of Ritz crackers for club stores.
Direct distribution through e-commerce, which Mondelez pioneered through the partnership with Alibaba it entered last year, has also been growing. In late 2015, Mondelez outlined a growth plan to achieve $1 billion in e-commerce business by 2020. Net revenues for e-commerce are up nearly one-third from last year, Rosenfeld said. Selling through Alibaba and Amazon, which is working to encourage CPG manufacturers to sell more to consumers online, have been Mondelez's most successful e-commerce efforts.
But not all is well at Mondelez. The company is not happy with its sales performance in North America, but remains hopeful that new leadership can turn things around. After the recent departure of Roberto Marques, the president for that region, the company's Chief Growth Officer Tim Cofer is filling in on an interim basis. Rosenfeld said that Cofer's current "focus on fundamentals," including direct-store-delivery capabilities, new products and sales channel growth, will for make a winning strategy.
The question remains if Rosenfeld will be part of a winning strategy for the snack giant. Last month, The Wall Street Journal reported the company is working with an executive search firm in order to replace Rosenfeld — who has said she has no current plans to leave her position. A replacement for the longtime executive could bring new perspective and ideas into the company and boost its profits.
Regardless of what happens with Rosenfeld, the manufacturer should see some fresh faces soon. The company has lost several key executives in recent months, with Chief Marketing Officer Dana Anderson and Bob Rupczynksi, the company’s vice president and head of global media, both exiting stage left.
Early in Wednesday trading, Mondelez stocks were up about 3.5%.