Mondelez Second Quarter Earnings Beat Estimates, Plans to Enter China Market

Mondelez International Inc (NASDAQ:MDLZ) announced its second quarter earnings on Wednesday, with the company’s profits beating expectations owing to cost cuts. Mondelez also disclosed the plan to expand its chocolate brand into China market.

Mondelez International, a global snack giant that is well-known for its brands like Oreo, Cadbury, Milka chocolates, Ritz and Trident gum. The company reported revenue of $6.3 billion in the second quarter, decreasing 18% year-over-year, which misses the Thomson Reuters estimates of $6.34 million. Profits of Mondelez increased to $464 million from $406 million in the same period last year. Earnings per share was 29 cents, increase 4 cents per share compared with that of 2015. If restructuring-related costs and other items are not considered, earnings per share was 44 cents, beating estimates of 40 cents per share. Gross margin dropped 0.1% to 39.9% and operating margin also decreased 0.9%, reaching 10.1%.

Irene Rosenfeld, the Chief Executive Office of the company, showed in the statement that it had confidence to meet the 2016 guidance and 2018 margin targets.

The company also announced today that it planned to introduce its Milka chocolate brand to China market in September. Hershey entered China market before Mondelez’s move, however, Hershey had a hard time in the $2.8 billion market and suffered a loss in international division last year. Mondelez made a $23 billion bid for Hershey last month, but the board of Hershey rejected the offer immediately.

“We see enormous potential for the growth of the chocolate category in China, where consumption today is low—even by emerging market standards,” Chief Growth Officer Tim Cofer said.

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