CADBURY parent Mondelez International beat Wall Street expectations for third-quarter profit on Thursday, supported by favorable cocoa prices and higher pricing across key regions, including North America.
Shares of the Oreo maker rose 6.5 percent in extended trading.
The company, which pushed through multiple rounds of price increases when cocoa prices rallied in past few years, has since benefited from a global surplus that drove down its costs, giving Mondelez more room to lure shoppers with promotions and value packs.
The Toblerone maker said pricing increased by 0.3 percentage point for the quarter, while volumes rose 1.8 percentage points. Volumes in its North American segment were flat, compared to a 1.8-percentage-point dip last year.
“A year ago, record cocoa costs forced price increases that pushed volumes down. Now, while still absorbing those costs, they’ve returned to volume growth, and brand creativity is part of the reason,” said Daniel Binns, CEO of brand consultancy firm Elmwood.
Still, CEO Dirk Van de Put said consumer confidence in North America remained pressured by higher energy prices and it does not expect this to improve anytime soon.
“The company’s reliance on pricing to drive growth in North America could soon produce diminishing returns, as cash-strapped shoppers spend a larger share of their budgets on gas and less on snacks like Oreos,” eMarketer analyst Rachel Wolff said.
Earlier on Thursday, rival Hershey also warned high inflation and elevated energy prices could hit consumers’ spending on candy this Halloween.
Mondelez also announced it would buy Undercover Snacks, which makes chocolate-coated quinoa crisps, as it looks to expand in the fast-growing “permissible indulgence” category.“Mondelez’s acquisition of Undercover Snacks could improve the company’s positioning in the better-for-you space, and attract spending from consumers willing to pay more for items with perceived health benefits,” Wolff said.
