Mondelez beats expectations, hikes buyback

AAP
August 08, 2013

OREO cookie maker Mondelez International Inc has reported a better-than-expected profit and sharply raised its stock buyback authorisation to $US6 billion ($A6.71 billion).

The increase in authorised share repurchases from $US1.2 billion comes after activist investor Nelson Peltz said he wanted PepsiCo Inc to shed its soda business and buy Mondelez to form a global snack powerhouse.

Peltz of Trian Fund Management also noted that Mondelez CEO Irene Rosenfeld was “running out of time” with investors, given the company’s underwhelming results since its split with Kraft Foods last year.

Stock buybacks benefit shareholders by reducing the number of outstanding shares. That in turn helps boost a company’s earnings per share.

As of March 31, Peltz had a $US1.23 billion stake in Mondelez.

Mondelez, which makes Cadbury chocolates, Trident gum and Ritz crackers, also said it’s increasing its dividend by eight per cent.

Its stock rose two per cent to $US31.99.

For the quarter, the company said it earned $US616 million, or 34 US cents per share. That compares with $US1.03 billion, or 58 US cents per share, a year ago, when it was still combined with Kraft Foods Group Inc.

Not including one-off items, it earned 37 US cents per share, which was three US cents more than Wall Street expected.

Revenue edged up to $US8.6 billion, shy of the $US8.63 billion analysts expected. Performance in emerging markets such as China, India and Brazil offset weaker results in North America and Europe.

Looking ahead, the company said it expects its revenue to grow in the low-end of its forecast of five per cent to seven per cent for the year.

The Deerfield, Illinois-based company said it still expects a full-year adjusted profit of $US1.55 to $US1.60 per share.