Mondelez Int'l (MDLZ) Misses Q4 EPS by 2c; Announces Venezuela Accounting Change

Mondelez Int'l (NASDAQ: MDLZ) reported Q4 EPS of $0.46, $0.02 worse than the analyst estimate of $0.48. Revenue for the quarter came in at $7.36 billion versus the consensus estimate of $7.27 billion.

Venezuela Accounting Change

The company also announced that, effective as of the end of the fourth quarter 2015, it began to account for its investments in its Venezuelan subsidiaries using the cost method of accounting. The change in accounting treatment reflects the loss of control due to the inability to operate in the normal course of business and the lack of currency exchangeability. Beginning in 2016, the company will no longer include net revenues, earnings or net assets of its Venezuelan subsidiaries within its consolidated financial statements.

As a result, the company has taken a one-time accounting charge of $778 million, or $0.48 per share, which had no corresponding tax benefit, in its fourth quarter results to remove all assets and liabilities of its Venezuelan operations from its balance sheet.

Outlook

Separately today, via a Form 8-K being filed with the Securities and Exchange Commission, the company is providing pro forma non-GAAP financial results that reflect the deconsolidation of its operations in Venezuela.

These pro forma adjusted financial results serve as the basis of the company’s updated 2016 outlook, as described below.

• Organic Net Revenue: The company expects Organic Net Revenue growth of at least 2 percent, including a headwind of up to 125 basis points from a combination of trade optimization and elimination of less profitable SKUs.Based on current exchange rates, the company estimates currency translation would reduce net revenue growth by approximately 6 percentage points due to the strengthening of the U.S. dollar versus other currencies.6
• Adjusted Operating Income Margin: For 2016, the company continues to expect Adjusted Operating Income margin to be 15 to 16 percent, and expects to be at the lower end of that range to reflect an approximately 50 basis point headwind resulting from the deconsolidation of the company’s operations in Venezuela.In addition, the company expects to deliver an Adjusted Operating Income margin of 17 to 18 percent in 2018.
• Adjusted EPS: The company expects to deliver double-digit Adjusted EPS growth on a constant-currency basis. The company estimates currency translation would reduce Adjusted EPS by approximately $0.13.6

For earnings history and earnings-related data on Mondelez Int'l (MDLZ) click here.

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