DEERFIELD, Ill. – Mondelez said price increases scared off some customers in its second quarter, and the company trimmed its sales forecast for the year.
The maker of Oreo, Cadbury and Trident on Wednesday reported lower sales that fell short of Wall Street expectations. Cost-cutting helped push up profit by 3.5 per cent, however. Like many other packaged food companies, Mondelez has been slashing costs wherever it can to offset weak sales.
In a conference call, CEO Irene Rosenfeld said Mondelez raised prices to make up for rising costs for ingredients such as cocoa and dairy products. The company had expected its pricing actions to hurt sales, she said, but didn’t expect such a big impact.
“It’s been even more challenging than expected,” she said.
She mentioned negative reactions in Europe, particularly in France, where some stores decided to stop carrying products because of the higher prices. Still, she said the lost market share should be temporary because competitors will eventually have to raise prices to cover their own costs.
Mondelez International Inc., based in Deerfield, Illinois, has been under pressure to improve its performance since splitting from Kraft Foods Group in late 2012. The split was intended to give each of the companies a more focused stable of products, with Kraft taking North American supermarket staples like Jell-O and Miracle Whip.
Mondelez took global snack brands like Oreo with greater growth potential. But the company has stumbled as an independent company. Earlier this year, it said it would join its coffee division with D.E. Master Blenders to strengthen that aspect of its business.
For the period ended June 30, Mondelez earned $622 million, or 36 cents per share. Not including one-time items, it earned 40 cents per share, which was a penny more than expected, according to Zacks Investment Research.
Revenue declined 1.8 per cent to $8.44 billion and was short of the $8.71 billion analysts expected.
For 2014, Mondelez now expects sales growth to be between 2 and 2.5 per cent. It had previously forecast growth of 3 per cent.
The company stood by its adjusted earnings per share guidance for 2014, but noted currency fluctuations are expected to have a greater impact than previously thought. It expects to earn $1.64 to $1.69 per share.
Its stock was down more than 2 per cent at $35.10.