Packaged snacks company Mondelez (NASDAQ:MDLZ) met Wall Streets revenue expectations in Q3 CY2025, with sales up 5.9% year on year to $9.74 billion. Its non-GAAP profit of $0.73 per share was 2.9% above analysts’ consensus estimates.
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Mondelez (MDLZ) Q3 CY2025 Highlights:
- Revenue: $9.74 billion vs analyst estimates of $9.71 billion (5.9% year-on-year growth, in line)
- Adjusted EPS: $0.73 vs analyst estimates of $0.71 (2.9% beat)
- Adjusted EBITDA: $1.51 billion vs analyst estimates of $1.62 billion (15.5% margin, 6.8% miss)
- Operating Margin: 7.6%, down from 12.5% in the same quarter last year
- Organic Revenue rose 3.4% year on year vs analyst estimates of 3.7% growth (31.4 basis point miss)
- Sales Volumes fell 4.6% year on year (0.3% in the same quarter last year)
- Market Capitalization: $77.91 billion
StockStory’s Take
Mondelez’s third quarter results were met with a negative market reaction, largely due to persistent volume declines and margin pressure despite meeting Wall Street’s revenue expectations. Management pointed to declining sales volumes, especially in North America and Europe, as a key challenge, with CEO Dirk Van de Put highlighting factors such as intensified consumer price sensitivity and a shift toward value channels. The company also faced higher input costs, particularly for cocoa, and competitive pricing dynamics in Europe, which contributed to a notable decrease in operating margin.
Looking ahead, management emphasized a multi-faceted approach to address ongoing headwinds, including new pricing strategies, increased channel investments, and targeted product launches. CFO Luca Zaramella noted that actions such as channel expansion, optimizing promotional effectiveness, and investment in premium and better-for-you segments are expected to support growth. Van de Put stated, “We believe that with the right investments and adaptations, we can return to positive growth in key markets next year,” but also acknowledged lingering risks related to consumer behavior and ongoing input cost volatility.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to continued consumer price sensitivity, competitive dynamics in Europe, and evolving channel preferences in North America.
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Europe pricing and elasticity: Management discussed how significant cocoa-driven price increases led to higher-than-expected price elasticity, especially for chocolate bars in markets like the U.K. and Germany. Van de Put noted that some competitors, particularly private companies, did not raise prices as aggressively, resulting in share pressure and necessitating adjustments to pricing and pack sizes.
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North America volume headwinds: The U.S. market saw a more pronounced slowdown in biscuit sales, with volumes declining as consumers prioritized essentials and shifted to value and club channels. Mondelez acknowledged that its market share in these faster-growing channels lags behind traditional retail, prompting efforts to expand presence and adapt pricing and packaging strategies.
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Emerging markets mixed performance: While emerging markets like Brazil and India demonstrated resilient growth, Argentina experienced significant volume declines due to macroeconomic instability. Downsizing in India helped mitigate the need for price increases, but overall emerging market volume was impacted.
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Promotional effectiveness and innovation: Management highlighted the need to revamp promotional tactics, focusing on event-based activations rather than simple price reductions. New product development, such as expanding better-for-you options and premium brands like Tate’s and Hu, was cited as a bright spot.
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Supply chain and productivity initiatives: A new North America supply chain program was introduced, aiming to automate bakeries and streamline logistics through fewer distribution centers. Zaramella indicated these changes are expected to lower costs and improve service levels over the long term, with most benefits materializing after 2027.
Drivers of Future Performance
Mondelez’s outlook emphasizes adapting to volatile input costs, shifting consumer preferences, and targeted investment in key growth areas.
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Channel and portfolio adaptation: Management plans to increase investments in club, value, and e-commerce channels, where consumer demand is shifting. The company aims to accelerate growth in premium and better-for-you brands, with a particular focus on protein bars and gluten-free offerings. These initiatives are expected to help stabilize volumes and build market share in underpenetrated segments.
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Pricing and promotional strategy: The company will continue to adjust pricing and pack sizes for price-sensitive consumers, especially in Europe and the U.S. Management expects elasticity to moderate as cocoa prices stabilize, but remains cautious about relying solely on price-driven growth. Enhanced promotional effectiveness, including event-based marketing, is a key tactic for improving topline performance without eroding margins.
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Cost discipline and supply chain efficiency: Ongoing efforts to automate manufacturing, consolidate logistics, and control SG&A (selling, general and administrative) expenses are intended to offset input cost pressures and support margin recovery. The North America supply chain program and future reductions in cocoa costs are viewed as enablers for improved profitability in the next several years.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the effectiveness of pricing and pack size adjustments in recovering lost volumes in Europe and North America, (2) the pace of growth in premium and better-for-you products such as protein bars and gluten-free snacks, and (3) the early impact of North America supply chain automation initiatives. The evolution of cocoa prices and consumer response to revised promotional strategies will also be critical signposts for progress.
Mondelez currently trades at $57, down from $60.24 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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