Mondelez International, the parent company of Cadbury, has issued a forecast indicating a larger-than-expected decline in its annual profit, reflecting pressures from higher costs, particularly surging cocoa prices. The warning sent the company’s shares down nearly 6% after hours on Tuesday.
Cocoa, a key ingredient in chocolate, has seen prices rise steadily over the past year, leading Mondelez and other companies in the food industry to increase the prices of their products. However, these higher prices have placed additional strain on budget-conscious consumers, many of whom are already dealing with the broader economic pressures of a cost-of-living crisis. This shift toward cheaper alternatives has affected demand for Mondelez’s premium brands, including Oreo and Toblerone.
Mondelez, based in Chicago, now expects its profit for 2025 to fall by 10% on an adjusted basis. This is a larger decline than analysts had predicted, with the average estimate sitting at a 6.7% drop. The company also noted that its outlook does not take into account potential import tariffs from the U.S. or retaliatory actions from other countries, with the global trade environment remaining uncertain and volatile.
The company’s performance in Europe, its largest market by revenue, was notably impacted by price hikes, which caused a dip in volumes during the fourth quarter. In contrast, volumes in North America saw a modest increase after Mondelez implemented a slight reduction of 0.9 percentage points in prices.
Higher cocoa and transportation costs have also contributed to a 650-basis-point drop in Mondelez’s adjusted gross profit margin, which stood at 31.5%. For the three months ended December 31, Mondelez reported net revenues of $9.60 billion, slightly missing analysts’ estimates of $9.64 billion. On an adjusted basis, the company earned 65 cents per share, below the anticipated 66 cents per share.
These financial pressures highlight the challenges faced by Mondelez as it navigates rising commodity costs and evolving consumer behaviours in an uncertain economic climate.
