Mondelēz International warns of challenges as cocoa prices surge

USA – Mondelēz International, the global snacking giant, has cautioned that rising cocoa prices could disrupt its supply chain and erode profit margins, despite posting strong full-year earnings.

While the company reported growth in 2024, soaring cocoa prices are creating concerns for the year ahead.

Cocoa costs surged sharply last year, dipped slightly, but have since spiked again in December and January, posing a significant challenge for Mondelēz, whose portfolio includes Cadbury, Toblerone, and Milka.

CFO Luca Zaramella acknowledged that while cocoa prices will eventually decline, the short-term outlook remains uncertain.

To navigate this volatility, the company is focusing on profit per kilogram to mitigate the impact, though Zaramella predicts a 10% profit decline in 2025 due to cocoa price fluctuations. 

“We need to protect price points, but if cocoa costs remain high, further price adjustments in 2026 may be necessary. Implementing ‘multiple pricing waves’ will help consumers gradually adapt to increased prices,” Zaramella explained. 

FY 2024 performance 

In the fourth quarter, Mondelēz International reported net revenue of US$36.4 billion, reflecting a 1.2% increase compared to the 14.4% growth recorded in the previous year.

While the company maintained revenue growth, the pace was significantly slower than in 2023. 

Organic net revenue grew by 4.3%, a notable decline from the 14.7% growth achieved in 2023.

This slowdown was accompanied by a 1% decline in volume/mix, a reversal from the 1.3% increase seen in the prior year, suggesting a drop in overall product demand or shifts in consumer preferences.

On the earnings front, diluted earnings per share (EPS) dropped by 5.5%, contrasting sharply with the 84.7% surge recorded in 2023.

However, adjusted EPS saw 13% growth, though this was lower than the 19% increase achieved in the previous year, indicating some resilience in the company’s operational performance despite the challenging market conditions.

By segment, chocolate saw 7.4% organic revenue growth, biscuits grew 1.7%, and gum and candy rose 7.5%.

Potential Hershey acquisition

According to Bloomberg News, Mondelēz is reportedly exploring a potential US$84 billion acquisition of Hershey, which could create one of the world’s largest confectionery companies.

Sources indicate that talks are still in early stages, and no deal is guaranteed. A crucial factor in any acquisition is The Hershey Trust Company, which holds voting control over The Hershey Company.

Since the trust’s primary beneficiary is the Milton Hershey School, its approval would be essential for any transaction involving the Pennsylvania-based chocolatier.

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