Cadbury parent company Mondelēz International beat market expectations for first-quarter sales and profit on Tuesday.
The confectionery maker was buoyed by steady demand for its expensive products such as chocolates and salted crackers, despite rising costs.
Shares of the American company were down 1% as it maintained its annual forecasts for organic net revenue growth and profit.
‘Strength Of Its Brands’
Senior analyst with eMarketer Zak Stambor said, “Mondelēz benefitted from the strength of its brands and its strong penetration in the snacking category in Q1.”
While Mondelēz International increased its prices by 6.3% in the quarter, volumes fell 2.1%.
Coca-Cola and PepsiCo saw strong performances in the quarter despite price hikes, whereas Nestlé’s sales suffered.
As Mondelēz increased prices to combat rising labour and transport costs, it drove away lower-income consumers who are already struggling with the cost of living.
The company’s volumes in Europe, a major revenue contributor, were down 3.5% compared to a 3.3% increase in the previous quarter.
Increased Margins
Stambor said, “While Mondelēz has strong brands in resilient categories such as chocolate and biscuits, consumers will trade down if prices are too high.”
However, significant price hikes implemented over the past few quarters helped the company expand its profit margins to 51.1% in the reported quarter.
This is a notable increase compared to 37.3% in the previous quarter.
The firm posted net sales of $9.29 billion for the first quarter, beating analysts’ average estimate of $9.16 billion according to data from the London Stock Exchange Group (LSEG).
On an adjusted basis, Mondelēz reported a profit of 95 cents per share for the quarter ending 31 March.
This was above analysts’ estimates of 89 cents per share, according to LSEG data.
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