The multinational confectionery manufacturer of Milka, Côte d'Or, Toblerone and Cadbury chocolate, as well as Barny bears, Belvita and Oreo cookies, lost nearly 4% of its market caps overnight, despite the freshly released quarterly numbers, which confirmed its continues financial growth in terms of both sales and profits. Its EPS (equity per share) was $0.84 in the Christmas quarter vs $0.78 on average market expectations, 2.5% QoQ and 15% YoY, on record revenue of $9.32 billion.
The crowd and some experts "blamed" Mondelez results in excessive contribution from price hikes, which logically led organic (physical) sales volumes to a 0.4% in the quarter. In particular, organic sales volume in North America saw a 5.5% decline, down from a 4.6% rise in Q3, to follow the price growth by 7.4% in the region. Further demand expansion could be limited due to cash-strapped consumers as many households were battered by inflation pressure, trying to cut back spending and save some extra money. Surely, many families do it, but the scale of the potential problem could be exaggerated when one applies it to crackers for a healthy breakfast and some chocolate for an afternoon tea and children.
Nevertheless, lower volumes in units provide higher efficiency in terms of money, thanks to price factor contribution, so that the company's profit margin of 37.3% exceeded consensus estimates of 36.7%, even though it declined from 38.7% in Q3. Net revenue growth is at 7.1%. We feel that the current situation does not look so severe to justify complete nullifying of the Mondelez share price rise in January. Mondelez marketers know what they are doing when raising prices for the company's target audience. A temporary downturn in the company's value is likely to be changed by another wave of recovery, and the current discount in the stock's price may soon be attractive for a new "generation" of bullish bets.
