Mondelēz International, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Although the request identifies 2021 Q4, this filing reports annual results; the supplied filing text does not provide a clear standalone fourth-quarter income statement or cash flow.
Business context
Mondelēz sells snacks and related products in more than 150 countries, including biscuits, chocolate, gum and candy. Its four operating segments are Latin America, AMEA, Europe and North America. About 75.1% of 2021 revenue came from outside the United States.
Key financial results
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Net revenue | $28.720 billion | $26.581 billion | +8.0% |
| Organic net revenue (non-GAAP) | $27.969 billion | $26.773 billion | +5.2% |
| Operating income | $4.653 billion | $3.853 billion | +20.8% |
| Net earnings attributable to Mondelēz | $4.300 billion | $3.555 billion | +21.0% |
| Diluted EPS | $3.04 | $2.47 | +23.1% |
| Adjusted EPS (non-GAAP) | $2.87 | $2.56 | +12.1% |
| Cash from operations | $4.141 billion | $3.964 billion | +$177 million |
Gross profit was $11.254 billion, a gross margin of about 39.2%; operating margin was 16.2%, versus 14.5% in 2020. Adjusted operating income was $4.775 billion and adjusted operating margin was 16.6%, flat year over year. Cash from operations less capital expenditures of $965 million was approximately $3.176 billion.
Revenue growth reflected organic growth of 5.2%—volume/mix and pricing each contributed 2.6 percentage points—plus favorable currency translation and acquisitions. Emerging-market organic revenue grew 12.2%; developed-market organic revenue grew 1.6%. Europe was the largest segment by revenue at $11.156 billion. North America segment operating income declined 13.6% to $1.371 billion, with management citing unfavorable volume/mix, higher input costs and supply and labor constraints.
Liquidity, debt and shareholder returns
- Cash and cash equivalents were $3.546 billion at year-end; total debt was $19.512 billion, compared with $20.046 billion in 2020. Debt-to-capitalization was 0.41. Cash less total debt implies net debt of approximately $16.0 billion.
- Current assets were $10.342 billion and current liabilities $14.008 billion. The company reported $7.0 billion of undrawn credit facilities and compliance with debt covenants.
- Approximately $1.7 billion of debt was due within 12 months, including $1.2 billion in July 2022 and $0.5 billion in September 2022. Management said it expected available cash and financing access to cover obligations.
- Cash used in financing activities was $4.069 billion. The company repurchased $2.110 billion of shares and paid $1.826 billion in dividends. The annualized dividend rate was raised to $1.40 per share.
Material changes, outlook and unusual items
- Operating income and GAAP EPS rose faster than adjusted results. Results included $742 million of gains on equity-method investment transactions, chiefly associated with KDP share sales; adjusted EPS excludes these gains and other specified items. The effective tax rate was 27.2%, including a $187 million net tax expense related to KDP share sales; excluding that impact, the company reported a 23.0% rate.
- Higher raw material, transportation, labor and fuel costs pressured results, particularly in the second half. Pricing actions and productivity helped offset input inflation, but management warned that elevated costs and supply, transportation and labor constraints could continue into 2022 and might not be fully offset by pricing or hedging.
- Management described the longer-term snacks revenue outlook as strong, while expecting revenue volatility until pandemic-related risks and supply and labor constraints ease. No specific 2022 revenue or earnings growth target is stated in the supplied filing text. Capital expenditures for 2022 were expected to be up to $1.2 billion.
- The Chipita acquisition closed January 3, 2022 for approximately $1.9 billion, including assumed debt. This is a subsequent event, not a 2021 operating result. In 2021, the company also acquired Gourmet Food, Grenade and the remaining interest in Hu, and sold the acquired Australian packaged seafood business.
- The Simplify to Grow restructuring program was extended through 2023; total planned program charges are $5.4 billion, with $5.0 billion incurred through year-end 2021. The company recorded $32 million of intangible-asset impairment charges in 2021 and reported no goodwill impairment. Eight brands, with aggregate book value of $1.146 billion, had fair value no more than 10% above book value.
- COVID-19, Omicron, inflation, labor availability, currency movements, commodity costs, Brexit-related logistics and climate and sourcing pressures remain risks. U.K. restrictions on certain promotions were expected from October 2022 and specified advertising restrictions from 2023; the company said the impact was uncertain and could be significant.
- Legal matters include a European Commission competition investigation and wheat-market litigation involving Mondelēz Global and Kraft Foods Group. The company said outcomes were uncertain; it currently did not believe proceedings would materially harm its financial position, results or cash flows, but an unfavorable outcome could be material. The auditor issued an unqualified opinion and reported effective internal control; acquired 2021 businesses were excluded from the internal-control assessment.
Most important facts for investors to verify
- How much of revenue and profit growth is sustainable organic growth versus pricing, favorable currency, acquisitions and non-recurring investment-sale gains.
- Whether pricing and productivity can offset continued inflation and supply, transportation and labor disruption without materially weakening volume or margins.
- Cash generation, debt repayment and leverage after funding the Chipita acquisition, planned capital spending, dividends and share repurchases.
- Progress and eventual cost savings from Simplify to Grow, and whether the brands with limited impairment headroom meet management’s forecasts.
- Developments in the European Commission investigation, wheat-related litigation, U.K. regulatory changes and other tax or regulatory contingencies.
- Integration and performance of recent acquisitions, including Chipita, and the outcome of the developed-market gum portfolio review expected in mid-2022.