NEW YORK, N.Y. – Shares of Mondelez International Inc. dropped in after-hours trading Wednesday after the maker Oreo, Cadbury and Nabisco said sales didn’t grow as strongly as Wall Street expected.
After splitting from Kraft Foods last year, the company also says it expects 2013 revenue growth to be in the low range of its long-term growth target of 5 to 7 per cent. But it raised the range of its guidance for operating income by 2 cents to between $1.52 and $1.57 per share to reflect more favourable currency exchange rates.
Kraft and Mondelez went separate ways so the companies could each focus on a more targeted portfolio of products. Kraft took North American grocery brands like Oscar Mayer, Jell-O and Maxwell House and Mondelez took international snack brands that were expected to help it grow at a faster rate.
But in the latest quarter, Mondelez said revenue fell 2 per cent to $9.5 billion. Organic revenue, which excludes the impact of acquisitions, divestitures, currency translations and integration costs, rose 4 per cent, which was shy of its own long-term forecasts.
Although cookies such as Oreo are performing strongly, CEO Irene Rosenfeld said in a conference call with analysts that chewing gum sales continued to weigh on results.
“Frankly, I’m disappointed that gum remains challenged,” she said.
Part of the problem is that people are generally chewing less gum, particularly in developing markets. She said that the broader category is expected to continue declining and that a turnaround could take time. She also noted that gum was only 9 per cent of the company’s revenue pie.
Lower prices for coffee also hurt results for the quarter.
For the October-to-December period, Mondelez earned $534 million, or 30 cents per share. That compares with $830 million, or 47 cents per share a year earlier, before the split with Kraft.
On an adjusted basis, reflecting the spinoff, operating income was 36 cents per share.
Analysts on average expected a profit of 37 cents per share on revenue of $9.65 billion, according to FactSet.
Shares of the Deerfield, Ill., company were down $1.23, or 4.4 per cent, at $26.52 in after-hours trading.
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