Snack maker Mondelez International Inc. (MDLZ, Financial) saw its revenue increase 8.0% in 2021, the company reported on Thursday, driven by organic net revenue growth of 5.2%, favorable currency and incremental sales from the company's acquisitions of Give & Go, Hu, Grenade and Gourmet Food. Volume and pricing drove organic net revenue growth. Mondelez’s brands include Oreo, belVita, LU biscuits, Cadbury Dairy Milk, Milka, Toblerone chocolate, Sour Patch Kids candy and Trident gum.
Gross profit increased $808 million while the gross profit margin decreased 10 basis points to 39.2%, with increased costs partially offset by higher mark-to-market gains from derivatives. Adjusted gross profit increased $376 million at constant currency, while the adjusted gross profit margin decreased 90 basis points to 38.7% due to higher raw material and transportation costs and unfavorable mix, partially offset by pricing, higher manufacturing productivity and volume leverage.
Operating income increased $800 million and the operating income margin was 16.2%, up 170 basis points on higher mark to market gains from derivatives, lower intangible asset impairment charges and lower restructuring charges. Adjusted operating income increased $256 million at constant currency, with no change to the adjusted operating income margin at 16.6%, with input cost inflation and unfavorable mix offset by pricing and SG&A leverage.
The company found itself under pressure during the fourth quarter due to rising ingredient and transportation costs. "2021 marked another year of strong top and bottom-line results despite a challenging macro environment," said Dirk Van de Put, Chairman and CEO. "We continued to execute well against our strategic growth initiatives with volume-led topline growth, strong profitability, increased investments in brands and capabilities, and strong free cash flow generation. We further strengthened our portfolio with the addition of several growth accretive acquisitions, which increase our exposure to broader snacking categories and expanding profit pools."
“I am proud of the way our colleagues continue to respond to challenging operating conditions by maintaining focus on delivering great products for our consumers and customers, while advancing against our ESG goals,” Van de Put added. “We are confident that our brands, strategy and focus on execution position us well to successfully navigate near-term volatility; to profitably deliver against a clear set of sizable growth opportunities; and to achieve our long-term financial targets in 2022 and beyond."
For 2022, the company expects performance in line with its long-term growth trajectory of 3% organic net revenue growth, high single-digit adjusted earnings per share growth on a constant currency basis and free cash flow of $3 billion. The company estimates currency translation will decrease 2022 net revenue growth by approximately 2.5%.
Mondelez “would likely raise prices further around the world this year, while also negotiating with its suppliers and hedging to reduce costs. Mondelez’s profitability continues to get squeezed as issues like commodity inflation, trucking shortages and labor challenges persist, especially in the U.S.,” according to the Wall Street Journal.
"This is the biggest challenge for us," said Van de Put. Referring to suppliers grappling with supply chain woes, he added, "They don’t have enough for all of their customers, so they basically say, you’ll have to pay what I tell you to pay. It’s all out of whack."
