Today, at a meeting with analysts and investors in Boston, Mondelēz International Chief Executive Officer, Dirk Van de Put, and other senior executives outlined the company’s new long-term strategy to generate sustainable shareholder value. The company also established new long-term targets, reaffirmed its 2018 outlook, and provided an outlook for 2019.
Dirk Van de Put said: “With strong leadership in our categories, an unparalleled portfolio of global and local brands and a solid footprint in fast-growing markets, we are uniquely positioned to lead the future of snacking. We have developed a clear strategic plan to accelerate our growth and drive attractive total returns centered around three strategic priorities: accelerate consumer-centric growth, drive operational excellence and build a winning growth culture.”
Entering a New Phase of Stronger Top-line Growth
At the conference, Van de Put and other leaders discussed Mondelēz International’s plan to transition to a more growth-oriented company. The company’s new strategy focuses on several key priorities:
- A more holistic view of consumer snacking behaviors to sharpen brand positioning in clear demand spaces;
- Transformation of marketing and digital capabilities to increase ROI;
- Balanced investments in both global and local heritage brands to achieve higher growth;
- The creation of a more agile organization with accelerated innovation capabilities;
- Brand extension into new markets and snacking adjacencies;
- Increased investments in channels such as eCommerce;
- Accelerating exposure in higher-growth geographies; and
- Leveraging partnerships and M&A to expand into new markets and snacking adjacencies.
Ongoing commitment to operational excellence
The company affirmed its commitment to operational excellence across the organization. Going beyond the company’s ongoing cost and productivity improvements, which will remain fundamental, this strategy focuses on continuous improvement of day-to-day operations, including world-class customer service capabilities as well as enhanced marketing and sales execution.
Reorientation of the organization around growth
To drive its new way of operating, the company outlined tangible actions it will take to reorient the organization around growth. As such, it will focus on building a winning growth culture that more effectively leverages local commercial expertise and enables the business to move with greater speed and agility. With increased investment in talent and capability building, this cultural shift will be complemented by a new employee incentive structure aimed at driving growth.
“Snacking Made Right”
Reflective of its new consumer-centric growth priorities, the company revealed its new tagline and purpose, “Snacking Made Right,” which builds on its promise to offer consumers the right snack, for the right moment, made the right way. This means offering a broad range of delicious, high-quality snacks to satisfy every consumer occasion, with more sustainably sourced ingredients that consumers feel good about.
Long-Term Growth Targets
Based on its comprehensive strategic review and its new strategic framework, the company outlined long-term annual targets and capital allocation priorities including:
- Organic Net Revenue1 growth of 3 percent plus;
- High-single digit Adjusted EPS1 growth at constant currency;
- Free Cash Flow1 of $3 billion plus; and
- Dividend growth outpacing Adjusted EPS growth.
Luca Zaramella, Chief Financial Officer, stated: “We are confident that our new strategic plan will create sustained long-term shareholder value, by accelerating our top-line growth, continuing to focus on productivity gains and improving our cash flow generation. We expect our new strategy to deliver consistent Adjusted EPS growth at constant currency in the high-single digits and strong Free Cash Flow in the years ahead.”
Mondelēz International provides guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange. Refer to the Outlook section below for more details.
In conjunction with today’s announcement, the company reaffirmed its full-year 2018 outlook with Organic Net Revenue growth at the high end of the range of 1 to 2 percent. In addition, it now expects share repurchases to be approximately $2 billion in 2018.
The company also provided an outlook for 2019. It expects Organic Net Revenue to increase 2 to 3 percent, Adjusted EPS to grow 3 to 5 percent on a constant currency basis, and Free Cash Flow to be approximately $2.8 billion.