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Truckers' strike in Brazil takes a toll on Mondelēz’s Q2 topline sales

By Douglas Yu contact

- Last updated on GMT

A Truckers' strike in Brazil has taken a toll on Mondelēz’s Q2 topline sales. Pic: ©GettyImages/Harald Schmidt
A Truckers' strike in Brazil has taken a toll on Mondelēz’s Q2 topline sales. Pic: ©GettyImages/Harald Schmidt

Related tags: Mondelez

Mondelēz has reported growth across all regions in Q2 ending June 30, although its topline was negatively impacted by the recent truckers' strike in Brazil.

CEO Dirk Van de Put said the company’s organic net revenue grew 3.5% during the period, reaching $6.11bn, and its chocolate and snacking businesses increased by 4% and 3% in sales, respectively.

“Truck strikes in Brazil has thrown off the quarter, probably had about a $20m impact on the topline,”​ he noted. As a result, the region contributed to a high single-digit decline in Mondelēz’s revenue.

Van de Put added the political unrest, which was initially caused by the domestic diesel fuel price increase, will affect consumer confidence and behavior for the rest of the year.

“We expect more disruption and bit of a difficult time for the second half of the year,”​ he said, noting the company still remains positive on a longer-term outlook for Brazil.

Despite the declining sales in Brazil, the Latin American market overall posted 3.8% organic growth, reaching $774m in Q2, according to Mondelēz's statement.

“Mexico led by strength in both biscuits and gum turned in solid results,”​ it stated.

‘Significant work’ to do in North America

Mondelēz said its sales in North America have recovered from the malware incident​ last year.

With recent product innovations, including Oreo Thins Bites and Ritz Crisp & Thins, the region reported a 5.7% organic revenue growth in Q2, reaching $1.68bn.

The growth was mainly driven by “solid biscuits results”​ in the US, said Mondelēz. It added its biscuits portfolio revenue grew 4.3% globally.

Moreover, the company’s CFO Brian Gladden, who will be replaced by Luca Zaramella​ in August, said there is still “significant work”​ to do in the market as categories such as gum continue to experience flat sales.

Europe, on the other hand, delivered a “strong volume growth and 2.5% organic growth”​ in sales, reaching $2.3bn in the quarter, added Gladden.

“Germany was a particular standout which was up double-digits. Our Milka biscuits brand is gaining strong consumer appeal across the country, which gives us confidence in our ability to continue to expand these products into our other regions,”​ he said. 

Improving global snacking trend

Van de Put said the global snacking trend is improving which is beneficial overall to Mondelēz’s business.

The trend can be reflected in the company’s sales performance in developing markets, including Asia and Africa.

In Q2, AMEA (Asia, Middle East and Africa) reported a 1.7% sales increase, according to Gladden.

“India continued its run of double-digit revenue growth… Expanding distribution in traditional trade, successful innovation and strong execution have been driving market share gains, underscoring our market leadership in Indian chocolate,”​ he said.

Gladden noted China delivered a mid-single-digit growth, driven by “good results in biscuits and share improvement in gum.

“Our e-commerce platform in China continues to grow, driven by gifting and personalization,”​ he said.

With Brazil, which represents roughly 6% of the company’s revenue, being more challenging than expected, Mondelēz now expects its organic net revenue growth to be 1% to 2% in 2018, added Gladden.

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