Mondelez flags US$200m revenue hit this year from Ukraine closures

  • April 27, 2022
Mondelez flags US$200m revenue hit this year from Ukraine closures

It also expects a hit to its annual profit due to the Russian invasion of the country.

US snacks heavyweight Mondelez International has estimated it will take a US$200m revenue hit this year following the closure of its two factories in Ukraine.

It also flagged a dent in its annual profit due to Russia’s invasion of the country.

However, Mondelez expects its organic net revenue to increase by over 4% in 2022. It had previously expected growth in line with its long-term target of more than 3%.

CEO Dirk Van de Put added: “Unfortunately, our site in Trostyanets [in eastern Ukraine] has suffered significant damage due to the substantial military action in the area.”

More widely, describing an operating environment with multiple challenges, Van de Put said: “If I think about the complex environment, we all know about the geopolitical conflict. There’s still some pockets of Covid, particularly in China at the moment, but also south-east Asia. We are seeing absolutely record inflation. And the supply chain disruption is still there. So probably one of the more difficult periods that I have known in my career from an operational perspective.”

Mondelez has acted on its prices to help offset the pressure it is seeing on its costs.

Zaramella said: “We are also announcing price increases across a number of markets for the rest of the year tied to inflation. We now expect input cost inflation in the low double-digit range for 2022 versus our prior view of approximately 8%.”

He added: “We also expect additional pricing in a number of markets connected to this inflation, and these actions could cause an increase in elasticity versus what we are seeing today. As a result, we have planned accordingly.

“As we gave you guidance for 2022, we had some headroom. So we still feel we have an opportunity to hit high single-digit EPS. But the situation is very volatile. And given these dynamics, we believe it is prudent to call a range of EPS growth between mid-single to high-single-digit.”

Mondelez – which this week announced it was buying Grupo Bimbo’s Mexican confectionery business Ricolino – saw net revenue rise in the quarter by 7.3%, on a year-on-year basis, to $7.76bn but operating income decrease by $189m.