August 7, 2013 / 8:44 PM / in 4 years

UPDATE 2-Mondelez profit beats Street; share buyback amount raised

By Martinne Geller
    Aug 7 (Reuters) - Packaged food company Mondelez
International Inc dramatically raised its share buyback
authorization and posted higher-than-expected earnings on
Wednesday, weeks after being criticized by prominent activist
investor Nelson Peltz.
    Mondelez, which makes Cadbury chocolate, Oreo cookies and
Trident gum, does not currently generate as much profit as it
could, and should be acquired by PepsiCo Inc, Peltz said
last month at a conference that was broadcast on CNBC cable
television. 
    "If you're trying to appease an activist investor, one way
is potentially through returning cash to shareholders," said
Morningstar analyst Erin Lash. 
    Mondelez shares were up nearly 2 percent in afterhours
trade. Lash said the size of the buyback authorization was
greater than may have been expected, but noted that the
company's margins remain under pressure. 
    "That could be tempering some of the response," she said.   
 
    Mondelez said it is now authorized to buy back up to $6
billion of its stock through 2016, up from $1.2 billion
previously. It expects to purchase $1 billion to $2 billion
worth of stock annually. 
    The company reported a 40 percent drop in second-quarter
earnings compared with a year earlier, before the company spun
off Kraft Foods.
    Net income was $616 million, or 34 cents per share, in the
second quarter, down from $1.03 billion, or 58 cents per share,
a year earlier.
    Excluding one-time items, including costs related to last
year's spin-off of Kraft Foods Group Inc, earnings were
37 cents per share. On that basis, analysts on average were
expecting 34 cents, according to Thomson Reuters I/B/E/S.
   The company also stood by its full-year outlook, which calls
for earnings per share of $1.55 to $1.60, excluding items. 
   Net revenue rose slightly to $8.60 billion, just below
analysts' average estimate of $8.62 billion. Organic revenue,
which strips out the impact of acquisitions and other items,
rose 3.8 percent. That is below the company's long-term target
of 5 to 7 percent growth. 
  The company also raised its dividend by 8 percent.

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