Mondelez International, Inc.: An Earnings Preview

Mondelez International (NASDAQ: MDLZ  ) will report fourth-quarter earnings on Wednesday. Here's what you need to watch for in the company's results.

Earnings expectations
The first issue that needs to be addressed is whether the global snack-food giant met Wall Street's expectations. Analysts tack profits for Mondelez at $0.44 per share this quarter. The company reported EPS of $0.41 per share for the third quarter. At that time, Mondelez raised its full-year 2013 EPS target range by $0.02 to $1.57-$1.62, reflecting the effects of some tax favorability. 

Organic growth
Mondelez's revenues increased 5.3% in Q3 2013, up from 3.8% in each of the first two quarters of the year. The company's two largest categories, biscuits and chocolate, drove third-quarter sales increases. The maker of Cadbury, Chips Ahoy!, and Oreo reported nearly $8.5 billion in sales last quarter and $35 billion for the full-year 2012. Management anticipates Q4 revenues to be down due largely to slowing GDP growth in China. The chocolatier expects its full-year 2013 organic net revenue growth to come in at 4%, below its initially targeted 5% to 7% range.

In the October 2012 breakup of Kraft Foods, Kraft Foods Group spun off from the parent company, which changed its name to Mondelez International. Mondelez retained the high-growth global snack-food portfolio, while Kraft received the slower-growing North American grocery business. Yet, since the corporate split, Mondelez has performed more sluggishly. Its stock has returned 18%, underperforming both Kraft's 22% return and the S&P 500's 25%. 

Emerging markets performance
Mondelez continues to aggressively pursue growth in developing markets, where the company currently obtains roughly 40% of sales. Last quarter, Mondelez posted 10.7% revenue growth in emerging markets, up from 9.7% in Q2 and 9.4% in Q1. Accelerating revenues during the past several quarters are nearing Mondelez's long-term target of double-digit growth. Third-quarter revenues increased most notably for BRIC markets. Brazil, Russia, and India each posted growth in the mid to high teens. Meanwhile, weak performance in China, where recent investments didn't translate into category growth, tempered Q3 results. 

Foolish final thoughts
When Mondelez reports earnings on Wednesday, I'll be watching to see what type of organic growth the company achieved in the fourth quarter and whether it meets full-year EPS and revenue targets. I'll also be looking for if and how Mondelez grew revenues in crucial emerging markets, particularly BRIC nations.

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