Mondelez 2025-26: Cocoa Cycle Bites, FY26 Org +0-2%
FY25 revenue $38.54B (+6%); Op income $3.62B (-43%); NI $2.45B (-47%); EPS $1.89 (-45%). Cocoa price spike compressed gross margin from 39.1% (FY24) to 28.0% (FY25). Mgmt FY26 guide: organic sales 0-2%, with developed market volume declines (PPA = price/pack architecture) + emerging market growth + chocolate disruption in Europe. 2027 step-up framework anticipated.
Key takeaways
- Cocoa cycle is the entire story. Gross margin collapsed from 39.1% to 28.0% — cocoa input cost spike (futures up 200%+ from base) couldn't be offset by pricing in real-time. FY26 guide implies improved cocoa coverage cost vs FY25.
- Net income -47% — but it's almost entirely cocoa, not structural deterioration. Brand share + customer relationships + emerging market growth all intact. The compression is a unit-economic event.
- Geographic dispersion is real. Emerging markets (Latin America + Asia + AMEA) growing as developed markets see PPA volume declines from price elasticity. North America biscuits + Europe chocolate the soft spots in FY26 guide.
- FY26 guide: organic sales 0-2%. Mgmt explicitly framed as "prudent" given short-term pressure points + cocoa flexibility.
- 2027 framework signals investment phase. "Step up in investments, significant uplift" expected — the company is leaning into brand investment + Biscoff innovation + emerging markets while developed markets stabilize.
Business
Mondelez International is the world's largest snacking company. Brand portfolio includes Cadbury, Milka, Toblerone, Lacta, Côte d'Or, Oreo, Ritz, Wheat Thins, Triscuit, Belvita, Chips Ahoy!, Halls, Trident, Sour Patch, Stride, Tang, Philadelphia (cream cheese), and others. Two product franchises:
- Chocolate (~40% of revenue): Cadbury, Milka, Toblerone, Côte d'Or, Lacta, Cadbury Dairy Milk + others. Cocoa-input-cost-exposed; FY25 gross margin compression was concentrated here.
- Biscuits + Baked Snacks + Confectionery (~50% of revenue): Oreo, Belvita, Ritz, Triscuit, Wheat Thins, Chips Ahoy! + many others. More margin-stable than chocolate but exposed to volume elasticity in developed markets.
- Other (~10% of revenue): Cheese (Philadelphia), gum, candy, and beverages.
Geographic mix: North America (~35% biscuits dominant; soft) / Europe (~30% chocolate dominant; cocoa cycle hitting hardest) / Latin America (~15%; growing) / AMEA (~20%; growing).
FY25 financial performance
| Metric (FY) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue ($B) | 36.02 | 36.44 | 38.54 |
| Gross profit ($B) | 13.76 | 14.26 | 10.79 |
| Gross margin | 38.2% | 39.1% | 28.0% |
| Op income ($B) | 5.50 | 6.35 | 3.62 |
| Op margin | 15.3% | 17.4% | 9.4% |
| EBITDA ($B) | 7.65 | 8.07 | 4.65 |
| Net income ($B) | 4.96 | 4.61 | 2.45 |
| Diluted EPS ($) | 3.62 | 3.42 | 1.89 |
| FCF ($B) | 3.60 | 3.52 | 3.24 |
| Capex ($B) | -1.11 | -1.39 | -1.28 |
| Total debt ($B) | 19.95 | 18.37 | 22.40 |
| Dividends ($B) | -2.16 | -2.35 | -2.49 |
| Buyback ($B) | -1.55 | -2.33 | -2.39 |
The cocoa cycle is the dominant narrative: GM -1,110bp YoY to 28.0% — extraordinary compression on a single input. Op margin -800bp to 9.4%. EPS -45% to $1.89 from $3.42. FCF held at $3.24B (-8%) — better than P&L on working capital release.
Total debt jumped to $22.4B (+$4.0B YoY) — funding cocoa raw material inventory + bridge financing through cycle.
Capital allocation
- Capex: $-1.28B FY25 (3.3% of revenue). Capacity + automation. Stable.
- Dividends: $-2.49B FY25 (+6% YoY). Continued steady raise despite earnings compression.
- Buybacks: $-2.39B FY25 — held similar pace to FY24.
- M&A: Bolt-on tuck-ins continued (smaller deals).
- Total debt: $22.4B (+$4.0B YoY) — cycle-related working capital expansion.
FY26 outlook (per Q4 2025 call, 2026-02-03)
| FY26 framework | Direction |
|---|---|
| Organic sales growth | 0% to +2% |
| Volume mix | Emerging markets growing; developed market PPA-related declines |
| Cocoa coverage | Cost better than FY25 (improving) |
| Chocolate strategy in Europe | Adjustments for higher elasticity |
| Brand investment | Increase as cocoa cost improves |
| North America biscuits | Soft on consumer confidence |
| 2027 framework | "Step up in investments, significant uplift" |
The 0-2% organic guide is intentionally conservative — Mondelez is calibrating for sustained cocoa volatility + soft developed-market consumer + giving room to outperform.
Bridge to FY26 EPS recovery: better cocoa coverage cost + GM expansion (toward FY24 39.1% baseline) + organic +1% midpoint + buyback compounding could put adj EPS in $3.00-3.50 range vs $1.89 FY25 GAAP. The recovery doesn't fully retrace FY24 but materially improves.
Key risks
- Cocoa cycle persistence: If cocoa futures stay elevated through FY26-27, GM recovery delayed.
- Developed market consumer confidence: NA biscuit volume + Europe chocolate elasticity. Continued softness compresses revenue.
- Sugar + dairy + grain inputs: Multi-input cost basket; cocoa is the dominant but not only.
- FX: Major emerging market currency exposure (BRL, MXN, INR, IDR). USD strengthening compresses reported revenue.
- Brand investment ROI: Increased advertising + innovation spend must drive volume in emerging markets to validate.
- Regulatory / sugar tax: Multiple geographies have or are considering sugar taxes affecting confectionery.
Bottom line
MDLZ FY25 is the cocoa-cycle compression year disguised by stable consolidated revenue. Revenue +6%, but GM -1,110bp + op margin -800bp = EPS -45%. FCF held at $3.24B + capital return $4.9B + dividend raise show the model still throws cash. FY26 guide 0-2% organic sales is the prudent floor; cocoa coverage improvement + brand investment + emerging market growth bridge to mid-single-digit volume + GM recovery in FY27. Risks are cocoa persistence + developed market softness; both manageable with brand portfolio + global mix.
Citations
- Mondelez International Inc. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- Mondelez Q4 2025 earnings call, 2026-02-03 — chocolate strategy adjustment for European elasticity, FY26 guide (organic 0-2%, cocoa coverage cost better, NA biscuit + EU chocolate disruption); 2027 framework: significant uplift, step up investments.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).