CHICAGO – Buoyed by volume growth in a tough macro environment, Mondelez International said strong profits and top-line profits in the third quarter have the snack and candy maker on track to meet its fiscal 2026 targets.
“Our underlying volume/mix has improved over the past few periods, and the third quarter growth of 1.8 percentage points is the strongest result in almost three years,” said Dirk Van de Put, chairman and chief executive officer, when reporting the quarterly results. “Equally important, we have moved from a significant volume/mix a year ago to all four areas now being flat to positive – a clear signal that consumer-centric investment and sharper commercial execution are working.”
The double-digit profit dollar growth is “enabling continued reinvestment behind our brand,” he said, as the company said its profit margin in the quarter included positive volume/mix and continued cost savings.
Net income for the quarter ended Sept. 30 rose 76% to $1.31 billion, or $1.02 per share in common stock, from $743 million, or 57¢ per share, a year earlier. Chicago-based Mondelez said the increase mainly refers to favorable year-over-year changes in the mark-to-market impact of commodities and foreign currency derivatives and acquisition-related items, plus the cost of pension participation.
Adjusted net earnings rose nearly 5% to $992 million, or 78¢ per share, from $949 million, or 73¢ per share, a year ago. That beat Wall Street’s top estimate for adjusted earnings per share of 76¢.
“Profitability is improving,” Van de Put said. “Adjusted gross share was up 14%, adjusted operating income was up 17% and adjusted EPS was up 5.5% in constant currency.”
Third quarter net income increased 2.3% year over year to $9.97 billion from $9.74 billion. Organically, revenue rose 2.1% on an uptick of 1.8% in volume/mix and 0.3% in price. All regions except Europe tallied net and organic revenue growth, and all generated volume gains other than North America, where the volume/mix came in flat.
“We delivered solid Q3 top-line growth of 2.1%, driven by underlying volume/mix of plus-1.8 percentage points, the strongest volume/mix performance since Q3 2023,” Van de Put said. “This marks the third quarter of sequential improvement and, importantly, all four regions delivered evenly to a positive volume/mix. The momentum of our strategic initiatives has increased to volume-led growth, with Emerging Markets continuing to deliver solid top-line growth, Europe returning to volume growth in Q3 and North America delivering solid top-line growth.”
Mondelez maintained its fiscal 2026 guidance after raising its top line last quarter. The company forecasts organic net revenue growth of at least 2% and adjusted EPS growth flat to 5% in constant currency.
“We maintain our full-year 2026 outlook,” Van de Put said. “Despite macro volatility and continued inflationary pressures, we remain confident in our ability to generate strong EPS growth for 2027, supported by increasing volume/mix, continued Emerging Markets strength, increased stability in our European business, strong momentum in North America, and an accelerating productivity pipeline and cost-saving initiatives even as we have more confidence in the environment, with increasing confidence in a wider environment. cautious consumers.”
He added that Mondelez’s sequential improvements show “the combined benefits of our playbook” in driving consumer value, expanding distribution, increasing innovation and investing in brands.
“We expect to maintain this volume-led momentum through the end of the year, laying the foundation for sustainable and profitable growth in the years ahead,” he said.
Mondelez said crackers led the biscuit share in North America.
| Photo: ©JUANARNOLDO – STOCK.ADOBE.COMBiscuits, baked snacks are gaining ground in North America
For North America, third quarter net revenue advanced 1.1% year over year to $2.85 billion, with organic growth of 1.6% driven by pricing due to flat volume/mix. Adjusted operating income fell 6.4% to $511 million.
“In North America, consumer confidence remains under pressure from energy prices,” Van de Put said. “Price sensitivity is driving growth in the value channel and smaller packages, while we continue to see premium and better-for-you options also grow. The biscuit category is stable, and the bar category is growing. Our execution was stronger this quarter. We gained share in biscuits – led by crackers – and sweets, driven by strong execution offerings and biscuits that can be done. which reinforces the belief that the category remains durable with consumers.
Among the core categories, chewing gum and candies led the quarter as organic revenue grew by nearly 7% with a 2.6% gain in volume/mix, driven by Sour Patch Kids innovation and gum strength in Latin America and China, according to Mondelez. Chocolate generated 2.8% growth in volume/mix, while organic revenue edged up 0.6%, with the company noting that Europe returned to volume growth after last year’s price wave.
Biscuits and baked snacks organic revenue was up 2.2% with volume/mix growth of 1.2%, driven by Oreo, Ritz and what the company called a “growing portfolio of cakes and pastries.”
“Our snacks category continues to grow on a global basis,” said Van de Put, “and approximately 70% of our revenue is held or acquired year-on-year, a significant increase this year, with US biscuits showing momentum as the main driver of sequential increases.
The acquisition of better-for-you snacks
In a conference call on October 29 with analysts, Van de Put commented on Mondelez’s planned acquisition of a majority stake in Undercover Snacks, which was announced in its monthly report. The New Jersey-based snack company makes crispy quinoa snacks that are covered in chocolate or frozen.
“It’s a healthy product with a good taste,” says Van de Put. “It’s so simple. It has better-for-you ingredients, it’s gluten-free, and it’s allergy-friendly.”
Mondelez expects the Undercover Snacks transaction to close in early 2027, pending regulatory approval and customary closing conditions.
“Overall, I would say the reason why we like it is that it is highly incremental for our portfolio,” Van de Put said. “I think we will get the place we want, especially the time that is better for you, the indulgences that are allowed, and we think this is a complementary consumer base. We believe that, over time, our portfolio should evolve towards healthier snacks, and this is one of the steps in that direction.”