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Mondelez International outlines long-term strategy, provides ’19 outlook
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Wednesday, 12 September, 2018, 08 : 00 AM [IST]
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Boston
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At a recent meeting with analysts and investors in Boston, Dirk Van de Put, chief executive officer, Mondelez International, and other senior executives outlined the company’s new long-term strategy to generate sustainable shareholder value. The company also established new long-term targets, reaffirmed its 2018 outlook and provided an outlook for 2019.
Van de Put said, “With strong leadership in our categories, an unparalleled portfolio of global and local brands and a solid footprint in fast-growing markets, we are uniquely positioned to lead the future of snacking.”
“We have developed a clear strategic plan to accelerate our growth and drive attractive total returns centered around three strategic priorities - accelerate consumer-centric growth, drive operational excellence and build a winning growth culture,” he added.
New phase of stronger top-line growth
At the conference, Van de Put and other leaders discussed Mondelez International’s plan to transition to a more growth-oriented company. The company’s new strategy focuses on several key priorities:
• A more holistic view of consumer snacking behaviours to sharpen brand positioning in clear demand spaces;
• Transformation of marketing and digital capabilities to increase return on investment (ROI);
• Balanced investments in both global and local heritage brands to achieve higher growth;
• The creation of a more agile organisation with accelerated innovation capabilities;
• Brand extension into new markets and snacking adjacencies;
• Increased investments in channels such as e-commerce;
• Accelerating exposure in higher-growth geographies, and
• Leveraging partnerships and mergers and acquisitions (M&A) to expand into new markets and snacking adjacencies
Commitment to operational excellence
The company affirmed its commitment to operational excellence across the organisation. Going beyond the company’s ongoing cost and productivity improvements, which will remain fundamental, this strategy focuses on continuous improvement of day-to-day operations, including world-class customer service capabilities as well as enhanced marketing and sales execution.
Reorientation of the organisation around growth
To drive its new way of operating, the company outlined tangible actions it will take to reorient the organisation around growth. As such, it will focus on building a winning growth culture that more effectively leverages local commercial expertise and enables the business to move with greater speed and agility. With increased investment in talent and capability building, this cultural shift will be complemented by a new employee incentive structure aimed at driving growth.
Snacking Made Right
Reflective of its new consumer-centric growth priorities, the company revealed its new tagline and purpose, Snacking Made Right. It builds on its promise to offer consumers the right snack, for the right moment, made the right way. This means offering a broad range of delicious, high-quality snacks to satisfy every consumer occasion, with more sustainably-sourced ingredients that consumers feel good about.
Long-term growth targets
Based on its comprehensive strategic review and its new strategic framework, the company outlined long-term annual targets and capital allocation priorities including:
• Organic net revenue growth of three per cent-plus;
• High-single-digit adjusted earning per share (EPS) growth at constant currency;
• Free cash flow of $3 billion-plus, and
• Dividend growth outpacing adjusted EPS growth
Luca Zaramella, chief financial officer, stated, “We are confident that our new strategic plan will create sustained long-term shareholder value, by accelerating our top-line growth, continuing to focus on productivity gains and improving our cash flow generation.”
“We expect our new strategy to deliver consistent adjusted EPS growth at constant currency in the high-single digits and strong free cash flow in the years ahead,” he added.
Financial outlook
Mondelez International provides guidance on a non-generally accepted accounting principles (GAAP) basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange.
In conjunction with the recent announcement, the company reaffirmed its full-year 2018 outlook, with organic net revenue growth at the high end of the range of one or two per cent. In addition, it now expects share repurchases to be approximately $2 billion in 2018.
The company also provided an outlook for 2019. It expects organic net revenue to increase two to three per cent, adjusted EPS to grow three to five per cent on a constant currency basis, and free cash flow to be approximately $2.8 billion.
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