3 Things to Watch For in Mondelez International Earnings

Mondelez International (NASDAQ: MDLZ  ) is set to report earnings after the market closes on Wednesday. Here's what you need to watch for in the company's results.

Organic growth
Formerly known as Kraft Foods, Mondelez completed its October 2012 spinoff of its North American grocery business, Kraft Foods Group (NASDAQ: KRFT  ) , which houses brands Velveeta, Jell-O, and Oscar Mayer. This earnings announcement will report 2012 results for the time period since the corporate breakup was finalized.

Mondelez International's organic net revenues increased 1.5% in Q3 2012, driven by favorable pricing of 2.2% but offset 0.7% from lower volume. For the first nine months of the year, organic net revenues increased 4.6%. In November, the company reaffirmed its 2013 organic net revenue growth outlook to be at the low end of its 5% to 7% growth target.

I'll be looking to see what type of organic growth took place in the fourth quarter and whether the company met its yearly target.

Developing markets performance
Mondelez is aggressively pursuing growth in relatively untapped emerging markets, a key growth driver for the company and from which it derives 44% of its revenues. As growing numbers of global middle-class citizens are developing Western-style snacking habits, worldwide snack food consumption is on the rise. It's expected to grow 7% annually by 2015.

Rival Hershey recently posted fourth-quarter revenue growth of nearly 12% compared to a year earlier, rounding out a solid 2012. These strong results endorse Hershey's similar strategy of concentrating investments in key international markets, notably Asia, Mexico, and South America. Mondelez delivered mixed third-quarter results in developing markets, with robust growth in India, China, Africa, and the Middle East, but disappointing results in Brazil and Russia.

I'll be watching to see if and how Mondelez grew revenues in these key markets.

Product mix
Mondelez's future success lies in its product mix, specifically in the fast-growing confectionery category. Chocolates, gums, and candies under its Cadbury, Milka, Toblerone, Trident, and Stride labels represent over 40% of its revenues.

In the snack foods world, higher-margin confectionery categories tend to enjoy faster growth rates than biscuits, cheese, and grocery categories. Also, confectioneries' relatively low price points support growth in emerging markets.

I'll be looking for how successfully the company executed its fourth-quarter and full-year 2012 product mix sales, especially in its confectionery category.

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