(Adds analysts’ comments, updates shares)
By Gayathree Ganesan
Oct 26 (Reuters) - Mondelez International Inc’s quarterly profit handily beat estimates, helped by cost cuts, and the Cadbury chocolate maker raised its profit forecast for the year, sending its shares up as much as 4.6 percent on Wednesday.
Since separating from Kraft in 2012, Mondelez has concentrated on increasing its profit margins by reducing costs through internal controls, divestitures and asset sales.
The company is in the midst of a $3 billion cost saving program, which runs till the end of 2018, opening more efficient manufacturing plants and using zero-based budgeting (ZBB), which requires expenses to be justified for each new period.
Mondelez has targeted cost savings of 30-50 percent in 12 areas including travel, sales support services and business events. ZBB efforts in travel have cut costs by 30 percent, Mondelez spokeswoman Valerie Moens told Reuters.
Overall selling, general and administrative expenses fell 13.3 percent to $1.6 billion in the third quarter ended Sept. 30.
Net sales fell 6.6 percent to $6.40 billion, hurt by a strong dollar and the deconsolidation of its Venezuela operations.
Organic net revenue grew 1.1 percent in the quarter, driven by sales of Oreos and Trident gum.
“We were pleased to see overall volumes were positive along with solid organic revenue growth especially considering many other competitors are struggling to grow sales,” Brittany Weisman, consumer staples analyst with Edward Jones said.
The company, however, cut its full-year organic growth forecast to about 1.6 percent from at least 2 percent earlier due to deceleration in some markets such as the Middle East where low oil prices have stifled demand.
Mondelez also raised its forecast for adjusted earnings per share for the full year to be up about 25 percent on a constant currency basis from its previous expectations of double-digit growth.
Net income attributable to the company fell to $548 million, or 35 cents per share, in the quarter, from $7.27 billion, or $4.46 per share, a year earlier.
The company had a $6.8 billion one-time gain from a joint venture with Dutch group D.E. Master Blenders, last year.
Excluding items, the company earned 52 cents per share in the third quarter, beating analysts’ average estimate of 43 cents per share, according to Thomson Reuters I/B/E/S.
Analysts on average had expected net revenue of $6.45 billion. (Reporting by Gayathree Ganesan in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)