February 11, 2015 / 3:15 PM / 4 years ago

UPDATE 2-Mondelez beats profit forecast, sees higher margin in 2015

(Adds analyst comments, CEO quote and context)

By Anjali Athavaley and Shailaja Sharma

Feb 11 (Reuters) - Mondelez International Inc, the maker of Cadbury chocolate and Oreo cookies, reported a better-than-expected adjusted quarterly profit and said it expects cost cuts to boost its full-year adjusted operating margin in 2015.

The company on Wednesday said it expects the margin to be about 14 percent in the year ending Dec. 31, up from 12.9 percent in 2014.

“This should be good enough, we think,” said JPMorgan analyst Ken Goldman in a note. “2015 guidance (including EPS, organic sales and margins) came in roughly as we anticipated.”

Since its split from Kraft Foods Group Inc in 2012, Mondelez has focused on margin expansion as the company, like others in the food industry, faces sluggish growth in developed markets and volatility in emerging ones. It has cut costs and implemented zero-based budgeting, which requires managers to justify every cost for each new period.

The company’s shares were up 1.7 percent to $36.42 in early afternoon trading.

Still, Mondelez faced questions about weakness in key markets. Net revenue in Europe, Mondelez’s biggest market by sales, fell 6.7 pct.

The company said on its earnings conference call that competitors have still been slow to catch up to the price increases it implemented to cover higher commodity costs in the region.

“The reality is a number of our multinational competitors have just lagged a little bit in pricing response, and that has put some pressure on the business,” Chief Executive Irene Rosenfeld said.

Mondelez said it expects organic net revenue to grow at least 2 percent in 2015, helped by a decision to focus on its snacks business, which it has done by hiving off its coffee and other businesses.

The company, which gets over 80 percent of its revenue outside the United States, said a strengthening dollar would hit revenue growth by about 11 percentage points and adjusted profit by about 30 cents per share.

Net revenue fell about 7 percent to $8.83 billion in the fourth quarter and missed analysts’ average estimate of $8.88 billion, according to Thomson Reuters I/B/E/S. Revenue rose 2.9 percent on an organic basis, Mondelez said.

Net income attributable to the company fell nearly 72 percent to $500 million, or 29 cents per share.

Excluding costs related to restructuring and a merger of the company’s coffee business with D.E. Master Blenders, Mondelez earned 47 cents per share, beating analysts’ average estimate of 43 cents.

Editing by Savio D'Souza and Christian Plumb

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