tapebrief
MDLZ · Q3 2025

MDLZ · Q4 2025 Earnings

Bearish

Mondelez International

Reported February 3, 2026

30-second summary

Mondelez closed FY2025 ahead of every revised guide — organic growth 4.3% vs. 4%+ guide, non-GAAP EPS $2.92 vs. ~-15% cc projected decline, FCF $3.2B vs. $3B+ — but the FY2026 setup is materially worse than the trajectory management telegraphed last quarter. FY2026 organic growth is guided to flat-to-2% (vs. FY2025's 4.3%) and adjusted EPS growth is capped at flat-to-5% constant-currency — explicitly below the "high single digit EPS growth" target the CFO anchored on the Q3 call — with a ~2.0% FX tailwind and cocoa deflation doing the heavy lifting. The Q&A then disclosed a ~$500M Q1 inventory headwind and confirmed chocolate net price-cost is planned only "neutral to slightly positive," meaning the cocoa windfall is being reinvested, not banked. The 2026 recovery has been pushed to 2027.

Headline numbers

EPS

Q4 FY2025

$0.72

Revenue

Q4 FY2025

$10.50B

+9.3% YoY

Gross margin

Q4 FY2025

28.2%

Operating margin

Q4 FY2025

9.1%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$10.50B+9.3%$9.74B+7.7%
EPS$0.72—$0.73-1.4%
Gross margin28.2%—26.8%+140bps
Operating margin9.1%—7.6%+150bps

Guidance

FY2025 results beat all key guidance metrics; FY2026 outlook significantly decelerated with organic revenue growth narrowing to flat-to-2% and EPS growth guidance capped at flat-to-5%, though materially offset by elevated currency tailwinds of ~2.0% on revenue.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Organic Net Revenue GrowthFY20254%+4.3%+0.3pts above guideBeat
Adjusted EPSFY2025approximately 15% decline on constant currency basis$2.92Actual EPS decline better than ~15% guide; FY2025 reported $2.92 non-GAAP EPS vs prior year baseline implied by negative guidanceBeat
Free Cash FlowFY2025$3+ billion$3.2 billion+$0.2B above guideBeat

New guidance

MetricPeriodGuideYoY
Organic Net Revenue GrowthFY2026flat to 2%—
Adjusted EPS GrowthFY2026flat to 5%—
Free Cash FlowFY2026approximately $3 billion—
Currency Translation Impact on Net Revenue GrowthFY2026approximately 2.0%—
Currency Translation Impact on Adjusted EPSFY2026$0.06—

Platform metrics

Q4 FY2025
SegmentQ4 FY2025
Organic Net Revenue Growth (Q4)5.1%
Organic Net Revenue Growth (FY2025)4.3%
Volume/Mix (Q4)-4.8%
Pricing (Q4)9.9%
FY2026 Organic Net Revenue Growth Outlookflat to 2%

Profitability

Q4 FY2025
SegmentQ4 FY2025
Adjusted Gross Profit Margin (Q4)30.5%
Adjusted Operating Income Margin (Q4)11.9%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Latin America$1.264B+7.9%
Asia, Middle East & Africa$2.078B+8.9%
Europe$4.391B+17.3%
North America$2.763B-0.6%
Emerging Markets$4.122B+13.2%
Developed Markets$6.374B+6.9%
Capital Return to Shareholders (FY2025)$4.9 billion—

Management tone

Q1 anchor: pricing algorithm intact → Q2: "not a slam dunk" → Q3: structural elasticity reset + high-single-digit EPS recovery target → Q4: cocoa-windfall reinvestment with the 2027 inflection narrative.

The 2026 recovery has been formally deferred to 2027. On the Q3 call the CFO anchored "high single digit EPS growth for 2026" on cocoa deflation. This quarter that target is gone, replaced by a flat-to-5% cap and a new framing from the CEO in Q&A: "2026 as new base year with more promotions and value offerings; 2027 as step-change for chocolate margins across all regions" — with the explicit conditioning that cocoa stabilizes around 3,000/tonne. The recovery hasn't been cancelled; it has been pushed back twelve months, and the bridge is conditional on a commodity price the company doesn't control. That is a meaningful narrative reset.

The cocoa windfall is being reinvested, not banked. Last quarter management spent considerable airtime preparing the cocoa-deflation EPS bridge. This quarter the CFO in Q&A confirmed "Chocolate net pricing-cost planned neutral to slightly positive in 2026" — and disclosed a one-time ~$500M Q1 inventory headwind from rolling year-end inventory carrying 2025 hedge costs into lower 2026 pipeline pricing. Combined with the explicit guide that ANC investments between 2024-2026 will be "meaningfully higher" than 2025 (working media especially), management has chosen to reinvest the cocoa tailwind into competitive pricing flexibility and brand support rather than let it drop to EPS. That choice is defensible but kills the 2026 EPS algorithm.

Promotional and pricing posture in chocolate has shifted from "defend price points" to "correct elasticity." On the Q2 call the CEO drew a hard line at the $3-$4 magic price point. Q3 framed elasticity at 0.7-0.8 as "not yet dramatic." This quarter the CEO in Q&A explicitly conceded "Higher than expected elasticity in Northern Europe, Germany, Nordics, UK requiring 2026 adjustments" — i.e., pricing will be reset down where the competitive gap got too wide. That is the de-pricing the company spent two quarters insisting it would not do.

Outlook qualifications escalated meaningfully. The release adds two new framings absent from prior guides: "greater than usual volatility" including geopolitical, trade, and regulatory uncertainty, and an explicit caveat that the guide excludes potential USMCA tariff changes. Management is pre-positioning for a downside scenario it cannot quantify.

Q&A highlights

Andrew Lazar · Barclays

What is Mondelez's chocolate strategy going forward, particularly regarding potential price deflation given the precipitous fall in cocoa prices?

Dirk outlined a multi-pronged chocolate strategy for 2026: adjusting prices to correct elasticity issues in Northern Europe, maintaining brand investments due to improved cocoa cost coverage, launching Biscoff collaborations and innovation, and activating in-store promotions. Management acknowledged recent unexpected cocoa price declines creating short-term competitive pressures but noted cocoa has returned to historic levels benefiting 2027 margins significantly. Strategy aims for 2026 flexibility while entering 2027 with strength.

Higher than expected elasticity in Northern Europe, Germany, Nordics, UK requiring 2026 adjustmentsCocoa coverage cost better in 2026 than 2025, enabling substantial brand investment increasesFrequency and quantity of consumption declined despite stable penetrationCocoa price returned to historic levels beneficial for 2027 margin expansion

Peter Galba · Bank of America

What is the cost phasing on cocoa in 2026, and how does pricing flexibility on chocolate play out over the year? Additionally, what is management's view on North American market dynamics and potential pricing actions?

Luca detailed inventory accounting mechanics: a ~$500 million one-time Q1 headwind from adjusting year-end inventory to lower 2026 pipeline costs despite higher 2025 hedges locked in. Pricing expected flat in chocolate 2026 despite cost declines, creating neutral-to-positive cost-price balance. On North America, Dirk attributed volume weakness to low consumer confidence, affordability concerns, and basket pressure; rejected deep pricing cuts, instead emphasizing brand investments, channel expansion, and premium/better-for-you offerings growing double digits.

$500 million inventory adjustment headwind in first two quarters, predominantly Q1Chocolate pricing expected flat in 2026 despite lower cocoa costsNet price-cost relationship in chocolate planned as neutral to slightly positiveU.S. biscuits category down 4% last quarter, 3% for full year 2025

Megan Clapp · Morgan Stanley

Clarification on net price-cost dynamics in chocolate for 2026 given cocoa declines and hedging impacts, and expectations for organic sales growth by region given emerging market momentum.

Luca confirmed neutral-to-positive net price-cost balance in chocolate for 2026; cocoa cost locked benefits offset by flat pricing. Emerging markets expected to sustain high single-digit growth with less pricing contribution and more volume-mix contribution as PPA moderates. Developed markets implied to decline low-to-mid single digits. Brazil highlighted as strong performer despite chocolate elasticity.

Chocolate net pricing-cost planned neutral to slightly positive in 2026Emerging markets to grow high single digits in 2026Developed markets implied low-to-mid single-digit decline in 2026Majority of emerging market volume declines attributable to PPA, not elasticity

Michael Lavery · Piper Sandler

What is the order of magnitude of advertising spend increases in 2026, and what assumptions underpin LATAM growth recovery?

Luca noted SG&A was down in 2025 but explained 2026 will see meaningful ANC step-up, particularly in working media. Between 2024 and 2026, overall ANC investments will recover meaningfully beyond 2025 depressed levels. On LATAM, Dirk attributed recent underperformance to Argentina economic turmoil and working capital protection; Brazil and Mexico performing well, with Brazil rated top performer on PPA execution and margin optimization.

ANC investments between 2024-2026 will be 'meaningfully' higher than 2025Working media to increase substantially in 2026 vs. 2025Non-working media to remain lower but less so than 2025Brazil one of best performing markets top and bottom line

David Palmer · Evercore ISI

What is the path to European chocolate profitability recovery to pre-2025 levels, and is 2027 the inflection point?

Dirk confirmed target of returning to pre-2025 profit pool levels and potentially exceeding them in 2027. Strategy hinges on cocoa pricing stabilizing around 3,000/tonne. 2026 framed as establishing new base with increased promotions and value offerings; 2027 as step-change recovery enabled by lower cocoa costs and brand investments. Selective price investments may be made if necessary.

Target cocoa price ~3,000/tonne assumed for 2027 profitability modeling2026 as new base year with more promotions and value offerings2027 expected step-change for chocolate margins across all regionsContinued ANC investments in European chocolate development anticipated

Answers to last quarter's watch list

Whether Q4 organic growth needs to print above 5% to hit the revised FY 4%+ guide. Q4 organic landed at 5.1% and FY at 4.3%, clearing the 4%+ floor by 30bps. The bigger signal is that FY2026 guidance reset to flat-to-2% — i.e., management used the FY2025 beat to lower the forward bar by ~200-400bps. Status: Resolved positively (on FY2025 print), but the forward implication is negative.
Adjusted gross margin direction from 30.4%. Q4 adjusted gross margin landed at 30.5%, +10bps QoQ — the first non-decline in several quarters and a sign that cocoa cost pressure is plateauing. However, with chocolate net price-cost planned only neutral-to-slightly-positive for 2026 and a ~$500M Q1 inventory headwind disclosed, the cocoa deflation is not flowing through to margin expansion in 2026 the way the Q3 call implied. Status: Resolved positively (margin stabilized), but the 2026 EPS recovery narrative is dead — the flat-to-5% cap confirms it.
Volume/mix at the company level vs. Q3's -4.6pp. Q4 vol/mix at -4.8pp, modestly worse than Q3, with pricing stepping up to +9.9pp. No volume recovery in the print, and CEO commentary in Q&A confirmed chocolate elasticity in Northern Europe remains higher than modeled and requires 2026 pricing corrections. Status: Resolved negatively
China commentary. The press release does not specifically isolate China, and the Q&A did not surface a dedicated China question. AMEA grew 8.9% reported in Q4 vs. 9.0% in Q3, suggesting no acute further deterioration. The company didn't disclose the granular China read management flagged at Q3. Status: Continue monitoring
Q4 FCF print. FY2025 FCF closed at $3.2B vs. the $3B+ guide, beat by $200M. The implied Q4 FCF (vs. YTD $1.2B at Q3) was ~$2.0B — the ramp landed. Status: Resolved positively
Explicit FY2026 guidance shape at Q4. FY2026 organic guided flat-to-2%; FY2026 adjusted EPS growth capped at flat-to-5% cc — explicitly below the "high single digit EPS growth" target the CFO anchored last quarter. FCF guided to ~$3B (down ~6% YoY). This is the walkback, with cocoa deflation reinvested rather than banked. Status: Resolved negatively
Capital return pace. FY2025 capital returned at $4.9B (vs. $3.7B at 9M), implying $1.2B in Q4 alone. The buyback did not moderate. Either management remains confident the 2027 recovery is in hand, or they are signaling FCF-funded return discipline holds despite the EPS walkback. Status: Resolved positively (pace held), with the caveat that aggressive returns into a guide cut is itself a signal worth watching.

What to watch into next quarter

Q1 2026 adjusted gross margin print against the disclosed ~$500M inventory headwind. Management telegraphed Q1 will be the worst quarter; if margin holds above ~27% despite the inventory drag, the 2026 trajectory is intact. Below 26% and the flat-to-5% EPS guide is at risk within one quarter.

Whether chocolate pricing actions in Northern Europe deliver volume recovery or just margin dilution. Dirk confirmed elasticity was higher than modeled and 2026 will include pricing corrections. Watch Europe organic split — pricing needs to fall meaningfully below +9.9pp with volume/mix improving toward -2pp for the elasticity reset to be working.

North America volume trajectory off the -3% FY2025 biscuits decline. Management explicitly rejected deep pricing cuts and is betting on channel mix (premium, better-for-you, club, value). If NA organic stays at or below -1% through H1 2026, the "structural envelope compression" thesis hardens and the 2027 recovery base shifts down.

FX tailwind realization vs. the +2.0% revenue / +$0.06 EPS assumption. USD strength or weakness movements through H1 directly reshape the guide. A FX reversal would expose how thin the underlying organic algorithm has become.

Working media / ANC dollar disclosures. The CFO promised "meaningful" step-up but did not quantify. Watch Q1/Q2 SG&A lines for evidence the reinvestment is real — if SG&A is flat YoY, the cocoa tailwind is silently dropping to EPS and the flat-to-5% guide becomes a sandbag.

Cocoa price trajectory vs. the 3,000/tonne anchor. The CEO explicitly named this as the 2027 modeling assumption. Any sustained move back above 4,000/tonne breaks the 2027 inflection thesis; a move to 2,500 enables an EPS guide raise mid-year.

USMCA tariff outcome. Management explicitly excluded tariff scenarios from the guide. Any material US tariff action on Mexican-produced biscuits or chocolate would force a guidance update.

Sources

  1. Mondelez International Q4 FY2025 earnings press release, filed via SEC EDGAR, February 3, 2026: https://www.sec.gov/Archives/edgar/data/1103982/000162828026005016/mdlzearningsreleasecontent.htm
  2. Mondelez International Q4 FY2025 earnings call Q&A exchanges (analyst-attributed)
  3. Tapebrief MDLZ Q3 FY2025 brief (prior-quarter context and watch list)
  4. Tapebrief MDLZ Q2 FY2025 brief (multi-quarter tone arc)

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