MONDELEZ INTERNATIONAL, INC.

(MDLZ)
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Delayed Nasdaq  -  04:00 2022-08-17 pm EDT
65.51 USD   -0.68%
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U.S. consumer sector braces for slowing demand as inflation bites

04/29/2022 | 11:25am EDT
FILE PHOTO: Shoppers are seen wearing masks while shopping at a Walmart store, in North Brunswick, New Jersey

(Reuters) - U.S. consumer goods firms, including P&G and Coca-Cola, are preparing for an impending slowdown in demand as runaway inflation fuels a surge in prices of everything from toothpaste to sodas and hammers the spending power of Americans.

Companies, including Gillette-maker P&G, PepsiCo and Hershey Co, saw surging sales during the pandemic even though they were forced to increase prices to combat rising costs of raw materials, labor and transportation.

However, top executives at several companies have warned over the past week that their actions to pass on the costs to consumers may come back to bite them and slow revenue growth.

"As we look ahead to the remainder of this year, we expect pricing power to remain strong, but (demand) elasticities to revert to historical levels," Hershey CEO Michele Buck said on Thursday.

Buck cited a fall in government benefits for the first time in two years and depleting consumer savings due to inflation outpacing wage growth as reasons for the demand reset.

U.S. consumer confidence edged lower in April as Americans turned less upbeat about the economy, and analysts are warning that it may only worsen.

"At least for the past year or two, CPG companies have been able to raise prices without seeing any meaningful dips to demand. That was an unusual operating environment for them but that's unlikely to last," CFRA Research analyst Arun Sundaram said.

"At some point we'll see a meaningful shift in consumer behavior."

To cope with the expected slowdown in consumer spending, companies are starting to take a wide range of measures, including the launch of cheaper products or cutting back on packaging.

Earlier this week, P&G said it was moving out of discretionary categories and focusing more on recession-resistant daily use cleaning and hygiene products, while Coca-Cola's CEO James Quincey said the company was expanding the use of cost-effective glass bottles.

Some companies are seeing the writing on the wall.

PepsiCo said demand in some emerging markets was starting to slow in response to price increases, while McDonald's said the effects of inflation had led lower-income customers to start buying cheaper or fewer menu items in some areas.

"The lower income consumer is probably feeling more pressure than the average consumer or wealthier consumer. We need to make sure that we continue to have value be an important part of our proposition," McDonald's CEO Chris Kempczinski said.

(Reporting by Uday Sampath in Bengaluru; Additional reporting by Medha Singh; Editing by Sweta Singh and Anil D'Silva)

By Uday Sampath Kumar


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
MCDONALD'S CORPORATION 0.20% 266.82 Delayed Quote.-0.47%
MONDELEZ INTERNATIONAL, INC. -0.68% 65.51 Delayed Quote.-1.21%
PEPSICO, INC. -0.06% 180.22 Delayed Quote.3.75%
THE COCA-COLA COMPANY -0.23% 64.88 Delayed Quote.9.58%
THE HERSHEY COMPANY -0.10% 230.48 Delayed Quote.19.13%
All news about MONDELEZ INTERNATIONAL, INC.
08/17Mondelēz International Releases 2021 Human Rights Due Diligence and Modern Slavery..
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08/11TreeHouse Foods to sell part of meal prep business for $950 million
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08/02Mondelez international reports q2 2022 results
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08/01Mondelez International, Inc. completed the acquisition of Clif Bar & Company.
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Financials (USD)
Sales 2022 30 560 M - -
Net income 2022 3 635 M - -
Net Debt 2022 19 025 M - -
P/E ratio 2022 24,7x
Yield 2022 2,24%
Capitalization 89 786 M 89 786 M -
EV / Sales 2022 3,56x
EV / Sales 2023 3,43x
Nbr of Employees 79 000
Free-Float 68,6%
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Number of Analysts 22
Last Close Price 65,51 $
Average target price 72,37 $
Spread / Average Target 10,5%
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Managers and Directors
Dirk van de Put Chairman & Chief Executive Officer
Luca Zaramella Chief Financial Officer & Executive Vice President
Robin S. Hargrove Executive VP-Research, Development & Quality
Javier Polit Chief Information Officer
Lois D. Juliber Independent Director
Sector and Competitors
1st jan.Capi. (M$)
MONDELEZ INTERNATIONAL, INC.-1.21%89 786
NESTLÉ S.A.-8.30%338 291
ARCHER-DANIELS-MIDLAND COMPANY27.76%48 404
THE HERSHEY COMPANY19.13%47 245
THE KRAFT HEINZ COMPANY6.41%46 812
GENERAL MILLS, INC.14.49%45 953