Cadbury parent company Mondelēz International forecast a bigger-than-estimated drop in its annual profit on Tuesday, signalling pressures from higher costs, including from surging cocoa prices.
The forecast sent the company’s shares down neatly 6% after the bell.
Prices of cocoa – a key ingredient in chocolate – have increased relentlessly over the past year, forcing companies such as Mondelēz to hike prices of their products.
That has pushed budget-strained consumers – who are already grappling with a cost-of-living crisis – towards cheaper alternatives.
Chicago-based Mondelēz expects its 2025 profit to fall 10% on an adjusted basis, compared with analysts’ average estimate of a 6.7% decline, according to data compiled by the London Stock Exchange Group.
The company said, “This outlook does not reflect any imposition of import tariffs by the US and potential retaliatory actions taken by other countries, as the tariff and trade environment is uncertain and rapidly evolving at this time.”
Mondelēz’s volumes in Europe – its largest market by revenue – fell in the fourth quarter on account of incremental price hikes.
However, in North America, volumes increased following a 0.9 percentage point reduction in prices.
The surge in cocoa prices, coupled with higher transportation costs, led to a 650 basis point decline in the company’s adjusted gross profit margin to 31.5%.
Mondelēz reported net revenue of $9.60 billion for the three months ended 31 December, compared with estimates of $9.64 billion.
On an adjusted basis, it earned 65 cents per share, below analysts’ estimate of 66 cents per share.
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