- Chocolate Market Resilience Resilient despite price hikes, with 2025 strategy focusing on pricing and brand investments.
- 2026 Cocoa Cost Impact Higher pipeline costs than spot prices, driving brand investments as costs stabilize in 2027.
- 2026 Guidance Range Organic sales growth projected at 0%-2%, with emerging markets (high single-digit) offsetting developed market declines.
- Q1 2026 Cost Adjustment $1B inventory accounting impact, leading to EBIT headwinds with sequential recovery by year-end.
- Advertising Spend Increase 2026 media investments to recover 2025 levels, targeting volume growth via working media strategies.
Guidance and Outlook
For 2026, Mondelez expects organic sales growth to be between 0% and 2%, driven by emerging markets growth in the high single-digit range, while developed markets are expected to decline in the low to mid single-digit range. The company anticipates a neutral to positive balance in chocolate between cost and pricing, with a real profit recovery starting in 2027. The guidance range considers short-term pressure points, including a subdued biscuits category in the US and potential disruption in Europe.
Cocoa Costs and Pricing Strategy
The recent decline in cocoa prices may require flexibility in guidance, depending on competitors' reactions. The company's cocoa pipeline cost for 2026 is determined and higher than the current spot price. Mondelez expects to increase investments behind brands due to better cocoa costs, with a focus on driving volume growth. The company plans to use price pack architecture to address affordability and expand in channels like value, club, and online.
Regional Performance
The company expects AMEA to be a source of volume growth, driven by countries like India, Australia, and China. Latin America is also expected to perform well, while North America will likely see volume declines, albeit at a slower pace. Europe is expected to see volume growth, driven by an easier comp and easing price increases. The company's regional performance will be driven by its ability to navigate local market conditions and consumer preferences.
Valuation and Metrics
Mondelez's current valuation metrics indicate a P/E Ratio of 21.95, P/B Ratio of 2.96, and EV/EBITDA of 17.37. The company's dividend yield is 3.26%, and the free cash flow yield is 2.98%. With analysts estimating revenue growth at 3.4% next year, the company's valuation appears reasonable, considering its ROIC of 6.45% and ROE of 13.44%. The Net Debt / EBITDA ratio of 3.67 indicates a moderate level of leverage.