UPDATE 3-Oreo maker Mondelez results weaker-than-expected; shares fall

Wed Feb 13, 2013 8:33pm EST

By Martinne Geller

Feb 13 (Reuters) - Mondelez International Inc reported weaker-than-expected revenue for the second time in its two quarters as an independent company, and its shares fell 3.7 percent in afterhours trade.

The company, which makes Trident gum, Oreo cookies and Cadbury chocolate, saw revenue rise 3.7 percent excluding any impact from acquisitions, divestitures and other things. That is slightly weaker than its forecast calling for mid-single-digit growth, which the company said would have been at least 4 percent.

Mondelez stood by its forecast for 2013 revenue growth at the low end of the 5 percent to 7 percent range, but at least one Wall Street analyst questioned whether Mondelez can achieve it.

"The organic growth has now fallen short of street expectations for two consecutive quarters," said JP Morgan analyst Ken Goldman on a conference call, noting that growth potential is the main reason for investing in Mondelez stock.

"Right now, there is a little lack of confidence that (Mondelez) will get to that 5 percent number, right or wrong," Goldman told company executives.

Late last year, Kraft Foods Group spun off from its parent company, taking away brands like Maxwell House, Kraft and Oscar Mayer from the snacks business, renamed Mondelez. While the new Kraft is a high-margin, North American business with mature brands, Mondelez was seen as more of a growth company, given its large exposure to emerging markets and snacks.

For the fourth quarter, Mondelez cited a sales interruption in Canada related to the separation of its businesses and ongoing weakness in the gum segment. In the third quarter, the company blamed "short-term executional" issues in Brazil and Russia, that it said have since improved.

The gum business has struggled for some time, due to market share losses and weakness in the overall category as young people, key buyers of gum, have been hit hard by unemployment.

"Frankly, I'm disappointed that gum remains a challenge," Chief Executive Irene Rosenfeld said on the conference call. "At only 9 percent of our total revenue, we do not need an immediate turnaround in gum to achieve our 2013 revenue guidance or our long-term targets." She said the company is working on improving its market share. Fixing the category will take more time, she said.

Aside from those things, Rosenfeld told Reuters she felt very good about the results, saying that performance in developing markets had rebounded as predicted.

"Overall, it was a sound quarter," Rosenfeld said, adding that she remains as convinced of the benefits of splitting up the company, if not more so, than she was last year.

The company raised its forecast for 2013 operating earnings to a range of $1.52 to $1.57 per share, due to currency. It earlier forecast $1.50 to $1.55 per share.

Revenue growth will be more modest in the first half of the year and accelerate in the back half, the company said.

Net profit for the fourth quarter was $534 million, or 30 cents per share, down from $830 million, or 47 cents per share, a year earlier.

Excluding items, earnings were 36 cents per share. Analysts on average were expecting 38 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 1.9 percent to $9.50 billion. Analysts expected $9.69 billion.

"We had thought Mondelez had the potential to disappoint on the top line, related to the turnaround efforts in the gum segment and the fact that tastes in snack preferences vary around the world," said Morningstar analyst Erin Lash. "We hadn't been as aggressive as the market."

Lash said she believes the fair value of Mondelez shares is around $24. The shares closed at $27.75 on Wednesday on the Nasdaq, up 9 percent this year. They fell to $26.76 in afterhours trading.