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Hershey Media Report 7/27/16
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Mondelez Combats Slump With Cost Cutting, Lifting Profit
Jul 27, 2016 | Bloomberg
By Craig Giammona
Mondelez International Inc., the global snack giant that recently made a bid to acquire Hershey Co., posted second-quarter earnings that beat estimates after cost cuts helped offset sluggish sales. -
Mondelez Reports Higher Profit, Plans to Expand in China
Jul 27, 2016 | Wall Street Journal
By Annie Gasparro
Lower sales are continuing to put pressure on snack giant Mondelez International Inc. but its chief executive on Wednesday played down the need for the company to make a large acquisition to reach its sales and profit targets. -
Mondelez CEO confirms made offer to purchase Hershey
Jul 27, 2016 | Reuters
By Lisa Baertlein
Mondelez International Inc (MDLZ.O) Chief Executive Irene Rosenfeld on Wednesday confirmed that the company made an offer to purchase Hershey Co (HSY.N). -
Mondelez hopes for sweet success as it launches chocolate in China
Jul 27, 2016 | Chicago Tribune
By Samantha Bomkamp
Mondelez, maker of iconic brands including Cadbury and Nabisco, will start selling its Milka brand chocolate in China in September, hoping to capture a slice of a still-small market the company believes is ripe for opportunity. -
Canned response
Jul 27, 2016 | Breaking Views
By Kevin Allison
CEO Irene Rosenfeld refused to elaborate on the confectioner’s rejected $23 bln bid for its rival. Avoiding the M&A rumor mill is fair enough. But her decision to try to gobble up Hershey represents a big strategic shift. Shareholders deserve more than a code of silence. -
Squawk Alley
Jul 27, 2016 | CNBC
View clip here: http://beta.criticalmention.com/app/#clip/view/23600443?token=e6f5beba-7038-44b0-afd6-85732ba03d7e -
Power Lunch
Jul 27, 2016 | CNBC
View clip here: http://beta.criticalmention.com/app/#clip/view/23598260?token=e6f5beba-7038-44b0-afd6-85732ba03d7e
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Mondelez Combats Slump With Cost Cutting, Lifting Profit
Jul 27, 2016 | Bloomberg
By Craig Giammona
Mondelez International Inc., the global snack giant that recently made a bid to acquire Hershey Co., posted second-quarter earnings that beat estimates after cost cuts helped offset sluggish sales.
Profit was 44 cents a share, excluding some items, the Deerfield, Illinois-based company said Wednesday in a statement. Analysts estimated 40 cents on average. Sales fell 18 percent to $6.3 billion, just shy of analysts’ average projection of $6.33 billion, as the strong U.S. dollar eroded the value of overseas revenue.
Mondelez, the maker of Oreo cookies and Ritz crackers, is trimming expenses in the face of sluggish international markets, where it generates most of its revenue. Chief Executive Officer Irene Rosenfeld also has been under pressure to expand the company’s profit margins, which have trailed those of food-industry competitors. The recent offer for Hershey, which was rejected by the chocolate maker, was seen as an effort to increase Mondelez’s exposure to the U.S. market.
The shares were little changed at $45.13 in New York trading after the results were released. Mondelez’s stock had gained 0.9 percent this year through Tuesday’s close.Hershey Offer
With the bid for Hershey, Rosenfeld was seeking to balance out the snack maker’s overseas-focused business. Mondelez, which split from Kraft Foods in 2012, was set up to focus on faster-growing emerging markets. But the global economic slowdown has hurt the company in recent years and made the U.S. a more attractive market. Hershey generated almost 90 percent of its revenue in North America last year, with the majority of that coming from selling chocolate in the U.S.
Mondelez also announced Wednesday that it will expand its Milka brand of chocolate to China, entering a $2.8 billion market where Hershey has struggled. Hershey’s move into the world’s most populous country has weighed on that company’s profit and led to a loss in its international division last year.
Rosenfeld, who has faced pressure from two separate activist investors in recent years, is pursuing $3 billion in cost cuts. The merger of Kraft Foods and H.J. Heinz, a deal orchestrated by the private equity firm 3G Capital and Warren Buffett, has added urgency to those efforts. 3G produced industry-leading margins at Heinz after taking the company private and has started attacking costs at the newly created Kraft Heinz Co.
Mondelez itself has been mentioned as a takeover target amid consolidation in the U.S. food industry, with Kraft Heinz considered a potential suitor. The offer for Hershey may have been more of a “defensive move,” according to Pablo Zuanic, an analyst at Susquehanna Financial Group.
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Mondelez Reports Higher Profit, Plans to Expand in China
Jul 27, 2016 | Wall Street Journal
By Annie Gasparro
Lower sales are continuing to put pressure on snack giant Mondelez International Inc. but its chief executive on Wednesday played down the need for the company to make a large acquisition to reach its sales and profit targets.
The maker of Oreo cookies and Trident gum in June made a bid to buy Hershey Co., which was promptly rejected by the famous chocolate company. But the move has fueled questions about potential deals that could lead to lower costs and expanded distribution.
Chief Executive Irene Rosenfeld wouldn’t comment Wednesday on whether Mondelez is still in talks with Hershey or plans to make another bid.
“Top-line growth is harder to come by because the categories we’re in have slowed down,” she said in a brief interview, and added that the company is focused on improving its profit margins and market share.
A tie-up between Mondelez and Hershey would create the largest candy maker in the world, helping them both expand to new markets. But any potential deal faces major obstacles. The trust that controls Hershey is under pressure to keep the candy company independent.
Like other big food companies, Mondelez is grappling with changing preferences in the U.S. toward foods perceived as healthier. The Deerfield, Ill., company has increasingly focused on emerging markets for growth. Currently, about 75% of its revenue comes from overseas.
But the countries that were long seen as golden opportunities--like Brazil and China--are now facing significant economic setbacks that have dampened Mondelez’s sales.
“The macroeconomic environment continues to remain challenging,” Ms. Rosenfeld said. “We are very focused on making sure we offer a variety of packaging sizes and price points so that the consumer can afford the options we make available to her.”
Mondelez’s global sales inched up 1.5% on a comparable basis, which excludes the impact of the stronger U.S. dollar on sales earned abroad. Its brands in Latin America led that growth for the second quarter, followed by the Asia Pacific and North America. Over all, revenue decreased 18% to $6.3 billion in the second quarter.
In the latest quarter, Mondelez reported a profit of $464 million, or 29 cents a share, up from $406 million, or 25 cents a share, a year earlier, boosted by its interest in coffee maker Jacobs Douwe Egberts.
Mondelez said it plans to enter the $2.8 billion chocolate market in China in September with its Milka brand. Hershey has a substantial presence in China, after acquiring a local candy maker in 2014.
Chocolate consumption in China is relatively low, and Mondelez said it can expand that, despite Hershey’s struggles there, and China’s ongoing economic issues.
“Mondelez’s decision to choose now as the correct time to launch Milka in China is an interesting one,” said Jack Skelly, food analyst at Euromonitor International. Mondelez has clear potential to grow there, but China’s chocolate sales fell 3% last year, so it will be difficult in the short term, he said.
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Mondelez CEO confirms made offer to purchase Hershey
Jul 27, 2016 | Reuters
By Lisa Baertlein
Mondelez International Inc (MDLZ.O) Chief Executive Irene Rosenfeld on Wednesday confirmed that the company made an offer to purchase Hershey Co (HSY.N).
Rosenfeld declined further comment on a conference call with analysts.
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Mondelez hopes for sweet success as it launches chocolate in China
Jul 27, 2016 | Chicago Tribune
By Samantha Bomkamp
Mondelez, maker of iconic brands including Cadbury and Nabisco, will start selling its Milka brand chocolate in China in September, hoping to capture a slice of a still-small market the company believes is ripe for opportunity.
Deerfield-based Mondelez already sells items from its biscuit and gum categories in China. Brands under those umbrellas include Oreo, Ritz and Trident.
But the chocolate market may have been too sweet to resist. Mondelez made the announcement in tandem with its second-quarter results, and said in a conference call that it believes it's an optimal time to start selling chocolate in China. The Chinese don't eat a lot of chocolate, even when compared with other emerging markets, so there's plenty of room to grow.
The chocolate market in China currently is valued at about $2.8 billion, according to Mondelez. The U.S. market is far greater; expected to reach $30 billion within five years, according to the firm Research and Markets. Globally, the market is worth almost $100 billion.
Mondelez already has built a factory in China to produce the Milka line when it gets up and running this fall. It has a strong e-commerce base there, most significantly through a partnership with e-commerce company Alibaba, which will allow it to sell in large numbers from the start.
The company is hoping that the Chinese expansion will cement its emerging-market business and set it up for future growth.
The Deerfield-based company said its second-quarter earnings rose 10 percent to $471 million, or 29 cents per share, compared with $427 million, or 25 cents per share, in the same quarter a year ago. Revenue fell almost 18 percent to $6.3 billion, hurt by a coffee joint venture.
The company declined to comment on whether it's planning to make another bid to buy chocolate powerhouse Hershey, as some Wall Street analysts have suggested. Hershey took only a few hours to rebuff a $26 billion offer last month. The combination would make the world's largest confectionary company.
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Jul 27, 2016 | Breaking Views
By Kevin Allison
CEO Irene Rosenfeld refused to elaborate on the confectioner’s rejected $23 bln bid for its rival. Avoiding the M&A rumor mill is fair enough. But her decision to try to gobble up Hershey represents a big strategic shift. Shareholders deserve more than a code of silence.
Mondelez International Chief Executive Irene Rosenfeld on July 27 refused to address the company's rejected $23 bln bid for chocolate maker Hershey during the Oreo maker's second-quarter earnings call.
"While I can confirm that we did make an offer to Hershey, as you would expect regarding any potential M&A activity, we have no additional comments to make," she said in her prepared remarks.
Later on the call, when a Wall Street analyst asked how Mondelez got to a point where it was willing to consider making a large acquisition, Rosenfeld had no comment.
Hershey on June 30 said its board had unanimously rejected a $23 billion offer for the company from Mondelez.
Note: rest of article appears behind a paywall. Link to article: http://www.breakingviews.com/considered-view/mondelez-owners-ill-served-by-hershey-omerta/
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Jul 27, 2016 | CNBC
Mondelez CEO Irene Rosenfeld discussed their bid for Hershey on Squawk Alley. View clip here: http://beta.criticalmention.com/app/#clip/view/23600443?token=e6f5beba-7038-44b0-afd6-85732ba03d7e
Rough transcript: Mondelez out with results that beat analyst estimates on the bottom line, the company also in the news for its chocolate cravings making a bid for hershey earlier this summer. Joining us now our own sarah with a special guest. >> And shares under a bit of pressure. i'd like to welcome back to the show irene rosenfeld, the chairman and ceo of mondelez that joins us by phone from company headquarters >> i'll start with the question on everyone's mind and that is what is the status of your pursuit of hershey after the rejected offer last month. >> Sarah I'll say to you what I just said on the call, I know everyone would like an update on the potential transcation. I can confirm that we did make an offer to Hershey but as you would expect we don't have any additional comment to make. >> Any sense of timing here, investors are sort of in limbo. >> i think we have a lot of good news to report for our investors we had a solid quarter in the face of a very challenging macro environment. we continue to return cash to our shareholders and i think our back half will strengthen given some of the investments we're planning to make. >> understood and we know you'll talk to us when you do have any news to report on that. as far as the results go the hershey deal is interesting because it would give you more exposure to the u.s. north america looks to be a bright spot on your report again. it looks like the only place you saw growth during the quarter from last year. do you continue that out performance in the US? We feel very good about the developed markets, we're continuing to see strong volume niche growth as we get some of the pricing actions behind us. and we do see those as areas of continued opportunity and investment. but frankly the market growth in our emerging markets is going to vary from time to time. We continue to see the long term growth potential in those markets as quite sizable. >> speaking of long-term growth potential, you made some news irene on china, entering that market with milk chocolate how popular is chocolate in china and what are you looking for in terms of growth at a time where some big multinationals are reporting a slow down in china buness like apple and starbucks at least in the near term >> well, there's no question that long-term china is an attractive white space opportunity for us. chocolate per capita consumption ther eis lower than just about every other market in the world but we have a very attractive bundle. if you think about the assets of our milk brand, the heritage of alpine milk, the strong profile we've got in terms of offering pack sizes for a variety of consumption occasions. we see this as a terrific opportunity for us to take what is today a biscuit and a gum market and to add chocolate to the overall portfolio which will be equitive to our growth. if you think about gum, we just entered the gun market about 3.5 years ago. and it's today a 200 million dollar business. we see a similar opportunity with the entry into chocolate. >> what about europe? what are you seeing right now in the UK and broadly across europe as we begin to ponder the after effects of the surprising brexit vote? >> we feel actually quite good about our momentum in europe and that's an area we will continue to invest in the back half. Our revenue was essentially flat but again our volume mixed which is an important underlying diagnostic of the health of that revenue growth continued to be positive up almost a point, driven by chocolate and biscuits so we have great hope for the continued improvement in our top line in europe but i would remind you that we had continued significant margin improvement on the bottom line. we increase our bottom line margins to 18% up about 350 basis points. europe will continue to be an important area of investment for us. >> i have to ask, you're such a big global company, protectionism is on the rise. you're hearing both sides of the aisle trashing trade in this election especially donald trump. we know how he feels about oreos and we've talked about that before. but as a company that does most of its business abroad and does manufacturing abroad do you worry about a trump presidency? >> i tell my folks that you can't change the direction of the wind but you can adjust your sails. it's not clear what's going to happen in this election but we're going to continue to stay focused on what we can control. we have a very robust supply chain strategy that allows us to source from a variety of countries around the world and we continue to use our power brands as a source of growth and to expand the footprint of those brands so that will be our continued focus regardless of the outcome of this election. >> i know the margin improvement is a big focus for you as well. thank you for joining us on the results as always. that is irene rosenfeld. the chairman and ceo of mondelez. >>
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Jul 27, 2016 | CNBC
Hershey was briefly mentioned in relation to the Mondelez bid. Clip included below.
http://beta.criticalmention.com/app/#clip/view/23598260?token=e6f5beba-7038-44b0-afd6-85732ba03d7e
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