(Reuters) -Mondelez International forecast a steeper decline in annual profit on Tuesday, as consumers scaled back on purchases of its pricey chocolates and snacks in North America, while higher cost
Mondelez Lowers Profit Outlook Amid Weakening Demand for Snacks
(Reuters) -Mondelez International cut its annual profit forecast on Tuesday, as value-conscious consumers scaled back on purchases of its pricey chocolates and snacks in North America and Europe, and higher cost of cocoa added pressure.
Consumers in the U.S. have been seeking healthier snacking options as they turn more conscious of their protein and sugar intakes, forcing packaged food companies to rethink their portfolios. Mondelez said it was looking to expand its Oreo zero sugar and gluten-free ranges.
The company has raised prices to offset higher cocoa costs. However, inflation has turned consumers more price conscious, weakening demand for Mondelez's products.
The prolonged U.S. government shutdown exacerbated economic uncertainty and cost-of-living concerns in the country, which has impacted consumer confidence, Mondelez executives said in a prepared statement.
Consumers, frustrated by price hikes, were focusing on essentials. This affected sales of snacks, and promotions were also not succeeding in bringing demand back into the category in the U.S., Mondelez executives said on a post-earnings call.
With Halloween approaching, Mondelez was looking to offer more differentiation between smaller and larger packs and work on its promotions to make sure products are affordable, the company said.
Like other consumer-facing firms, including Tide detergent maker Procter & Gamble and snacks giant PepsiCo, Mondelez said lower-income consumers were shopping for value with smaller packs and at discounted channels, while higher-income consumers looked for premium, fresher products.
Mondelez's Volumes fell 7.5 percentage points in Europe, its biggest market, and 1.8 pp in North America. Van de Put said that the company, which raised prices by 12.6 pp in the quarter in Europe, was also hurt by lower prices from its competitors.
The company expects 2025 adjusted earnings per share to decline about 15%, compared with its prior target of a 10% fall.
Its shares were down 4% in extended trading after Mondelez also tempered its expectation for annual organic net revenue growth to 4% plus, compared with about 5% it forecast in July.
Mondelez's quarterly net sales of $9.74 billion edged past analysts' average estimate of $9.71 billion, according to data compiled by LSEG, while its adjusted earnings per share also beat expectations by 2 cents.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)
