By Anuja Bharat Mistry
(Reuters) -Cadbury parent Mondelez International beat market expectations for first-quarter sales and profit on Tuesday helped by steady demand for its pricey products such as chocolates and salted crackers, despite rising costs.
Shares of the Chicago-based company were down 1% after the bell as it maintained its annual forecasts for organic net revenue growth and profit.
“Mondelez benefited from the strength of its brands and its strong penetration in the snacking category in Q1,” said Zak Stambor, senior analyst with eMarketer.
While Mondelez International increased its prices by 6.3 percentage points in the quarter, its volumes fell 2.1 percentage points.
Last month, peer Campbell Soup also saw a dip in volumes owing to price hikes, despite beating quarterly sales and profit estimates on steady demand.
As the Ritz cracker maker increased prices to counter rising input costs for labor and transport, it drove away the lower-income cohort that is already grappling with a rising cost of living.
The Toblerone maker’s volumes in Europe, a major revenue contributor, were down 3.5 percentage points, compared to a 3.3 percentage point rise seen in the last quarter.
“While Mondelez has strong brands in resilient categories such as chocolate and biscuits, consumers will trade down if prices rise too high,” Zak said.
However, significant price hikes undertaken over the last few quarters helped the company expand its gross profit margin to 51.1% in the reported quarter, compared with a 37.3% rise in the last quarter.
The firm posted net sales of $9.29 billion for the first quarter, beating analysts’ average estimate of $9.16 billion, according to LSEG data.
On an adjusted basis, Mondelez reported a profit of 95 cents per share for the quarter ended March 31, compared with analysts’ estimate of 89 cents per share, according to LSEG data.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)
