Mondelēz International, the maker of iconic brands including Cadbury chocolates and Oreo biscuits, reported a significant profit decline in its first quarter results yesterday, as the company battles with unprecedented cocoa cost inflation.
The snack giant saw its diluted earnings per share plummet by 70.2 per cent to just $0.31 (£0.23), while adjusted earnings per share fell by 18.3 per cent on a constant currency basis to $0.74.
Despite the challenging environment, the company managed to deliver a modest 0.2 per cent increase in net revenues, with organic net revenue growth of 3.1 per cent. However, this was partially offset by unfavourable volume mix, which declined by 3.5 per cent.
The company's gross profit margin decreased dramatically by 2,500 basis points to 26.1 per cent, primarily driven by the soaring cost of cocoa and other raw materials.
“We delivered solid Q1 2025 results in line with our expectations, driven by strong execution of our growth strategy while navigating unprecedented cocoa cost inflation,” said Dirk Van de Put, chair and chief executive of Mondelēz International.
The results come against the backdrop of an extraordinary surge in cocoa prices, which nearly tripled in 2024, reaching a record high of $12,931 a metric ton in December. Although prices have since retreated to around $8,200, they remain significantly above historical averages, putting severe pressure on chocolate manufacturers worldwide.
Earlier this month, Barry Callebaut, the world's largest supplier of chocolate to the food industry, cut its annual sales forecast after net profit tumbled 60 per cent in the first half of its financial year due to the surge in cocoa prices.
Despite these headwinds, Van de Put expressed confidence in the company's outlook, stating: “Our Q1 pricing and share performance, along with the global strength of our categories, provide us with continued confidence in our full-year outlook. We remain committed to delivering against our strategic agenda and staying agile in this volatile operating environment to drive sustainable shareholder value.”
The company has maintained its full-year guidance, reaffirming expectations for organic net revenue growth of approximately 5 per cent. However, adjusted earnings per share are projected to decline by approximately 10 per cent on a constant currency basis due to the continued impact of cocoa cost inflation.
Mondelēz International returned $2.1 billion to shareholders in cash dividends and share repurchases during the first quarter and continues to forecast free cash flow of over $3 billion for the full year.
The company noted that its outlook is provided in the context of “greater than usual volatility,” including geopolitical, trade and regulatory uncertainty, as well as ongoing commodity price pressures.
