MDLZ Q2 Deep Dive: Pricing, Regional Divergence, and Margin Gains Amid Consumer Caution

Packaged snacks company Mondelez (NASDAQ:MDLZ) announced better-than-expected revenue in Q2 CY2025, with sales up 7.7% year on year to $8.98 billion. Its non-GAAP profit of $0.73 per share was 7.6% above analysts’ consensus estimates.

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StockStory’s Take

Mondelez’s second quarter results were met with a negative market reaction, despite revenue and non-GAAP profit both surpassing Wall Street expectations. Management highlighted that pricing actions and strong international performance offset ongoing volume declines, particularly in North America. CEO Dirk Van de Put pointed to “continued weakness in North America, but we had a strong quarter in the rest of the world,” attributing results to global diversification and stable demand for snacking categories. The company’s focus on cost discipline and selective price increases helped lift operating margins, even as consumer anxiety weighed on U.S. performance.

Looking forward, Mondelez’s guidance reflects a cautious approach to consumer sentiment, especially in the U.S., where management expects little near-term improvement. CFO Luca Zaramella stated, "We have not planned for a material rebound of the category in the rest of the year." The company aims to balance further pricing with protection of key price points and pack sizes, while monitoring chocolate elasticity and emerging market momentum. Management indicated plans to increase brand investment in 2026 to support volume recovery, particularly if cocoa costs moderate, but remains prudent given ongoing economic uncertainties and volatile input costs.

Key Insights from Management’s Remarks

Management attributed Q2 results to global pricing actions, cost discipline, and resilience in emerging markets, while acknowledging persistent U.S. softness and weather impacts in Europe.

• International strength offset U.S. softness: Robust growth in emerging markets like India, Brazil, and Mexico counterbalanced declining U.S. volumes. Management credited “double-digit growth” and strong share gains in these regions, despite consumer caution and a shift toward discount channels in markets like China.
• Selective pricing drove revenue: Incremental price increases were implemented across both developed and emerging markets, with a focus on protecting popular U.S. price points and pack sizes. Zaramella described the approach as “quite surgical,” aiming to avoid material volume losses while offsetting higher input costs, especially cocoa.
• Weather affected European chocolate: A severe heat wave in Europe during June and July temporarily suppressed chocolate volumes, though management noted a quick recovery as temperatures normalized. This led to heightened vigilance on chocolate demand elasticity for the remainder of the year.
• Retailer destocking in North America: Ongoing inventory reductions by U.S. retailers, driven by cash flow management and tariff anticipation, added to volume headwinds. CEO Van de Put explained this dynamic as “probably wanting to import more from the countries that were going to be affected,” followed by efforts to reduce other inventories.
• No current GLP-1 impact: Management’s analysis found minimal effect from GLP-1 weight-loss drugs on U.S. snacking volumes. Van de Put stated, “The penetration is not going up at this stage,” and does not expect a significant impact even as pill versions become available next year.

Drivers of Future Performance

Mondelez’s outlook is shaped by further pricing actions, volatile input costs, and cautious expectations around U.S. demand and chocolate elasticity.

• Continued pricing and RGM (Revenue Growth Management): The company plans additional targeted price increases in North America and emerging markets to manage rising input costs, especially cocoa. Management aims to shield key price points and multipacks to limit volume loss, but acknowledges that “category volume...is at this point, down volume-wise minus 3%.”
• Increased brand investment in 2026: If cocoa prices normalize, management expects to raise working media spend to support brand strength, particularly in chocolate. Van de Put noted, “We will have to support our brands and make sure that the volume in the category remains or it goes back to where it historically has been.”
• Risks from consumer behavior and weather: Management remains cautious on U.S. consumer sentiment, citing ongoing anxiety and focus on essentials, and is closely monitoring European chocolate volumes following weather disruptions. They also flagged retailer destocking and possible competitive actions as ongoing risks.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be tracking (1) the pace and consumer response to new pricing in North America and Europe, (2) chocolate volume trends as weather normalizes and as elasticity is tested, and (3) continued momentum in emerging markets amid further pricing waves. Execution in alternative channels and increased brand investment will also be key indicators for Mondelez’s progress.

Mondelez currently trades at $61.56, down from $69.73 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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