Mondelez International has revealed an anticipated significant dip in annual profits, attributed to climbing cocoa prices and rising costs. This announcement sent its shares plummeting by nearly 6% after trading hours.
Cocoa prices, a critical ingredient in chocolate production, have surged over the past year, compelling companies like Mondelez to increase their product prices. This has resulted in financially stretched consumers turning to cheaper alternatives amidst the cost-of-living crisis.
The Chicago-based company predicts a 10% drop in adjusted profit for 2025, exceeding analysts’ average forecast of a 6.7% decline, as per data from LSEG. According to Mondelez, “This outlook does not reflect any imposition of import tariffs by the U.S. and potential retaliatory actions taken by other countries, as the tariff and trade environment is uncertain and rapidly evolving at this time.”
In Europe, Mondelez’s largest market by revenue, product volumes declined in the fourth quarter due to incremental price hikes. Meanwhile, in North America, volumes saw an increase following a 0.9-percentage-point price reduction.
These factors have combined with escalating transportation costs to reduce the company’s adjusted gross profit margin by 650 basis points, bringing it down to 31.5%. Mondelez reported net revenues of $9.60 billion for the quarter ending December 31, slightly missing estimates of $9.64 billion. Adjusted earnings were 65 cents per share, just shy of the anticipated 66 cents per share.
The financial pressures faced by Mondelez underscore the challenges companies encounter amidst volatile market conditions. The ongoing surge in essential commodity prices like cocoa, paired with broader economic uncertainties, continues to test the resilience and adaptability of businesses.
