(Reuters) -Mondelez International forecast a steeper decline in annual profit on Tuesday, as consumers scaled back on purchases of its pricey chocolates and snacks in North America, while higher cost of key
ingredient cocoa added further pressure.
Consumers in the U.S. have been seeking healthier snacking options as they turn more conscious of their protein and sugar intakes, forcing packaged food companies to rethink their portfolios.
"Although we anticipate challenging conditions to continue in some markets, we are encouraged by recent moderation in cocoa prices, as well as promising signs for a strong cocoa crop this fall," Mondelez CEO Dirk Van de Put said in a statement.
The company hedges against a rise in cocoa prices. The commodity saw a steep rise in costs last year due to supply disruptions in West Africa, impacting chocolate makers such as Mondelez and Hershey.
Cadbury maker Mondelez's shares were down 4% in extended trading. They have risen about 3% so far this year.
The company has taken a few rounds of price hikes to counter the effect of higher cocoa prices in key markets such as Europe and the U.S. However, inflation and economic volatility have turned consumers more price conscious, weakening demand for Mondelez's products.
Overall volumes fell 4.6 percentage points in the third quarter, while prices rose 8 pp. That compared with a 1.5 pp drop in volume and a 7.1 pp increase in price in the second quarter.
The company expects 2025 adjusted earnings per share to decline about 15%, compared with its prior target of a 10% fall.
Mondelez's quarterly net sales of $9.74 billion edged past analysts' average estimate of $9.71 billion, according to data compiled by LSEG. Its adjusted earnings per share of 73 cents also beat estimates by 2 cents.
Mondelez also tempered its expectation for annual organic net revenue growth to 4% plus, from about 5% it forecast in July.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)
