Mondelez (NASDAQ: MDLZ) adjusted EPS climbs 5.5%, but profit is still down for the year

What happened

Mondelez International, Inc. (NASDAQ: MDLZ) reported third-quarter adjusted earnings per share of $0.78, up 5.5% in constant currency. It reaffirmed its 2026 outlook.

The quarter shows margins recovering, but adjusted profit for the first nine months is still below last year. Net revenues rose 2.3% to $9.97 billion, with organic growth of 2.1%.

Chairman and Chief Executive Officer Dirk Van de Put credited broad-based volume growth. He said the company is reinvesting in its brands, innovation and distribution. Mondelez also agreed to buy Undercover Snacks, a quinoa crisp line in what the company calls the high-growth permissible indulgence segment.

Key numbers

Metric	Latest	Change	Source
Q3 net revenues	$9.97 billion	from $9.74 billion, +2.3%	SEC 8-K, Exhibit 99.1
Q3 diluted EPS	$1.02	from $0.57, +78.9%	SEC 8-K, Exhibit 99.1
Q3 adjusted EPS (change at constant currency)	$0.78	+5.5%	SEC 8-K, Exhibit 99.1
Q3 adjusted operating income margin	13.9%	+1.9 percentage points	SEC 8-K, Exhibit 99.1
Nine-month adjusted operating income (change as reported)	$3.79 billion	-1.0%	SEC 8-K, Exhibit 99.1
Nine-month free cash flow	$1.7 billion		SEC 8-K, Exhibit 99.1

Read more: Mondelez International (MDLZ) company research

Where the growth came from

Growth was volume-led. Volume mix added 1.8 percentage points to organic growth. Pricing added 0.3 points. Emerging markets grew 4.1% organically and developed markets grew 0.8%.

Asia, Middle East and Africa organic net revenue rose 7.7% and Latin America rose 6.9%. North America rose 1.6%. Europe fell 2.1%, with pricing a 3.7-point drag on the region.

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Why it matters

Reported results flatter the quarter. Diluted EPS rose 78.9% to $1.02. Operating income rose 136.3% to $1.76 billion.

The filing says the gains came mainly from a favorable swing in the value of commodity and currency derivatives. It also cites a favorable change in acquisition-related items. For EPS, it adds that pension participation charges a year earlier did not repeat.

The cash flow statement shows the size of that swing. Nine-month unrealized gains on derivative contracts were $1.09 billion, against a $1.16 billion loss in the 2025 period.

Gross margin appears in two forms. Reported gross margin rose 12.6 percentage points to 39.4%. Adjusted gross margin rose 3.8 points to 34.2% on lower raw material costs, manufacturing productivity, volume mix and pricing.

Where adjusted margins stand

Adjusted operating income excludes the derivative and acquisition items. It rose 18.2% to $1.38 billion in the quarter, or 17.0% at constant currency. Adjusted operating margin rose 1.9 percentage points to 13.9%.

The filing credits lower raw material costs, manufacturing productivity, higher net pricing and volume mix. Higher selling, general and administrative expenses and higher advertising and consumer promotion costs offset part of those gains.

The longer view is less comfortable. For the first nine months, adjusted operating income of $3.79 billion is down 1.0% as reported and 3.7% at constant currency. The 12.9% adjusted margin is 0.8 percentage points lower. Adjusted EPS of $2.18 is down 4.1% in constant currency.

OptimistFi has argued that Mondelez's earnings growth depends on restoring margins after the 2025 operating-income shock. The third quarter moves that way, but the nine-month figures show margins still below last year's level.

Cash and shareholder returns

Cash generation improved. Operating cash flow for the nine months was $2.6 billion, up from $2.12 billion a year earlier. Free cash flow was $1.7 billion. Receivables absorbed $1.21 billion of cash, against $92 million in the 2025 period.

Mondelez returned $2.8 billion to shareholders through the third quarter. Dividends paid were $1.93 billion, up from $1.84 billion. Share repurchases were $845 million, which OptimistFi calculates is 55.4% below the $1.89 billion a year earlier. The return mix has shifted toward dividends.

Cash and equivalents ended September at $1.63 billion, down from $2.13 billion on Dec. 31, 2025. Short-term borrowings rose to $3.65 billion from $2.69 billion.

What's next

Mondelez reaffirmed 2026 guidance of organic net revenue growth of at least 2% and adjusted EPS growth of flat to 5% at constant currency. It expects free cash flow of approximately $3 billion. By OptimistFi's calculation, that leaves about $1.3 billion to come in the fourth quarter.

Currency translation is estimated to add about 1.5% to net revenue growth and $0.04 to adjusted EPS, based on XE.com rates from Oct. 22. The outlook does not reflect any potential tariff changes to USMCA-compliant trade. The company gives it amid greater than usual geopolitical, trade, regulatory and commodity volatility.

The next quarterly report will show whether the third-quarter margin gain holds. It will also show whether year-to-date adjusted profit moves back toward last year's level. During the quarter, the company completed its new ERP system for North America and Latin America. The other segments are expected to finish by year-end 2028. ERP costs were a drag on reported operating income.

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