July 25, 2018 / 9:01 PM / 3 months ago

CORRECTED-UPDATE 1-Mondelez profit beats on higher chocolate sales, cost controls

(Corrects paragraph 8 to 56 cents from $56)

July 25 (Reuters) - Mondelez International Inc on Wednesday reported a better-than-expected quarterly profit as it sold more Cadbury chocolates and Oreo biscuits in Europe and North America, while keeping a lid on costs.

Shares of the world’s No. 2 confectioner rose 5.04 percent to $43.7 in extended trading on Wednesday as the company’s Power Brands business registered fourth straight quarter of gains.

The business, which houses Cadbury, Milka and Trident Gum, reported second-quarter sales of $4.55 billion, a 5.2 percent rise from a year earlier. It accounted for nearly 75 percent of its total revenue.

Mondelez’s performance comes at a time when food packaging companies are facing a number of challenges ranging from higher transportation costs to consumers’ growing preference for healthier foods.

The company has been opening more efficient manufacturing plants and implementing zero-based budgeting, which requires expenses to be justified for each new period, as part of plans to cut about $3 billion in costs by the end of 2018. These efforts drove adjusted gross profit margin up 60 basis points to 40.4 percent. Net income attributable to the company fell to $323 million, or 22 cents per share, in the second quarter ended June 30 from $498 million, or 32 cents per share, a year earlier.

Excluding items, the company earned 56 cents per share, beating analysts’ estimates by 2 cents, according to Thomson Reuters I/B/E/S.

Net revenue rose about 2 percent to $6.11 billion, but fell marginally short of estimates. (Reporting by Indranil Sarkar and Nivedita Balu in Bengaluru; Editing by Anil D’Silva)

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