Analyst Note| Erin Lash, CFA |
Rising COVID-19 case counts globally and inflationary headwinds have yet to deter Mondelez. As evidence, the firm chalked up more than 6% organic sales growth (3.4% on a two-year basis) and 30 basis points of adjusted operating margin expansion to 16.2% in its second fiscal quarter (reflecting volume leverage, stringent cost management, and higher prices). And even in the face of stepped-up raw material costs (qualitatively referenced), the firm continued to funnel resources behind its brands (with working media up double-digits over the year ago), and we think this spend to tout its value-added innovation is yielding improvement across its mix. Chocolate (more than 30% of sales) and biscuits (nearly half of sales) were again bright spots, posting nearly 13% and 3% underlying growth, respectively (or around 6% for each on a two-year stack basis). And although gum and candy eked out impressive marks (up 28% in the latest three-month period), our enthusiasm is tempered by the 33% downdraft in the year-ago period, plagued by languishing category dynamics in developed markets.