Cadbury-maker Mondelez records rise in fourth quarter sales
While price hikes have led to Mondelez improve its profit margin through fiscal 2023, it is now starting to see softer demand as cash-strapped consumers cut back spending.
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Mondelez International posted a rise in fourth-quarter sales on Tuesday, but price hikes took a toll on volumes as it squeezed demand for the Cadbury parent's chocolates and salty crackers, sending its shares down more than 2 percent after the bell.
While price hikes have led to Mondelez improve its profit margin through fiscal 2023, it is now starting to see softer demand as cash-strapped consumers cut back spending.
In the North America segment, Mondelez saw volume decline 5.5 percentage points (pp) in the fourth quarter owing to weaker biscuit sales and inventory control, down from a 4.6 pp rise in the previous quarter. Product prices in the region rose 7.4 pp.
The company recorded an overall volume decline of 0.4 pp in the quarter, joining other consumer staples firms such as McCormick in facing the brunt of significant price increases.
"While other CPG brands that leaned on price hikes to drive growth had seen volumes decline in Q3, Mondelez managed to grow its volumes. But now Mondelez's price hikes are catching up to it," said Insider Intelligence analyst Zak Stambor.
Gross profit margin of 37.3% exceeded market expectation of 36.7%, but was lower than 38.7 percent it logged in the prior quarter.
Net revenue rose 7.1% to about $9.31 billion in the quarter ended December 31.
