Bearish stock to watch: MONDELEZ INTERNATIONAL INC Common Stock (NASDAQ: MDLZ)

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MONDELEZ INTERNATIONAL INC Common Stock (NASDAQ: MDLZ) stock fell over 0.2% on 29th April, 2020 (as of 11:41 am GMT-4 ·; Source: Google finance) post results for the first quarter of FY 20. Organic net revenue growth was 6.4% for the period, as the developed markets performing strongly in March. However, the first two months of the quarter were in line with last year’s results, which showed both strong top and bottom line growth. The exception was China that showed a significant slowdown in February, even though in March, China started to come back quickly. North America and Europe became strong drivers as the consumers not only stocked up, but also consumed more of their trusted brands. At the same time, the emerging markets had started to experience disruption due to abrupt lockdowns that made sales and distribution more difficult. Emerging market growth was 4.5%, or 2.4% when excluding Argentina. Due to the COVID-19 pandemic, the company has temporarily withdrawn its full-year outlook. The company had generated free cash flow of $70 million and had returned $1.1 billion to the shareholders in the first quarter.

On the bright side, in the first quarter, biscuits, which is about 45% of revenue, has seen the biggest spike in demand due to COVID-19. In the US. the company’s biscuit brands, Oreo, belVita, Ritz, Triscuit and Wheat Thins all delivered mid-teens growth or more in the first quarter, which led to share gains of 2.5 points in the last three weeks. In China, the company posted share gains of 7 points in the latest reading. And in the UK, the company posted gains of 1.5 points over the Easter period.

MDLZ in the first quarter of FY 20 has reported the adjusted earnings per share of 69 cents, beating the analysts’ estimates for the adjusted earnings per share of 65 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 2.6 percent to $6.71 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $6.54 billion.

Furthermore, the pricing was positive across both developed and emerging markets and in all of the four regions. The additional costs that was associated with over time, front-line workforce bonuses and customer service and logistics affected the gross profit results. The company’s gross profit grew by nearly 6% in Q1. Operating Income grew nearly 6% as higher A&C and front-line expenses were partially offset by cost reduction programs and volume/mix gains.

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