Mondelez Sales Fall but Higher Prices Bolster Results -- Update

By Annie Gasparro 

Mondelez International said charging more for its snacks in the U.S. will help cover rising costs this year.

The maker of Oreo cookies, Wheat Thins and other snacks began raising prices last year along with other food and consumer-products companies, despite opposition from grocery stores worried about losing customers.

In recent months, a steady rise in shipping and packaging costs and inflation in key commodities softened retailers to their demands.

"Pricing in 2019 will be slightly higher than 2018," Chief Executive Dirk Van de Put said in an interview. "Overall, snacking is doing pretty well, so that helps in pricing decisions."

Mondelez on Wednesday said its adjusted gross profit margin widened to 40% in the fourth quarter from 39.1% a year ago, due to prices that were 1.5% higher on average. Shares fell about half a percentage point after hours on Wednesday.

Under Mr. Van de Put, chief executive for a little over a year, Mondelez has overhauled its marketing strategy and adopted a new approach to product launches that allows it to test ideas in smaller regions before a wider rollout.

Mondelez has also tried to follow the shift toward fresher, more natural foods in the U.S. by buying niche, trendier brands, like Tate's Bake Shop cookies. That has helped boost sales. In the latest quarter, Mondelez's comparable sales rose 2.5%.

Sales in emerging markets, which make up about one-third of revenue and have driven growth for Mondelez lately, were up 6.5% in the quarter. Sales in North America, where Mondelez has struggled in recent years, rose 0.8%.

Total revenue fell 2.8% to $6.77 billion. Mondelez's profit, adjusted to exclude acquisitions, foreign currency fluctuations and other one-off events, rose 21% to 63 cents per share. Both metrics matched analysts' projections.

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Patrick Thomas

contributed to this article.

Write to Annie Gasparro at [e-mail]

(END) Dow Jones Newswires

January 30, 2019 18:13 ET (23:13 GMT)

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