Mondelez Intl (MDLZ) is trading lower today after it made a number of announcements this morning: Q2 earnings, a new CEO and a dividend increase. In terms of quick background, you may not know the name Mondelez but you are familiar with its brands. It's a major food company with a focus on snacks. It's a leader in biscuits, chocolate, gum, candy and powdered beverages. Some of its largest brands include Oreo, Chips Ahoy!, Ritz, TUC/Club Social and belVita biscuits; Cadbury Dairy Milk, Milka and Lacta chocolate; Trident gum; Halls candy; and Tang powdered beverages.
The company was formed in 2012 when Kraft Foods decided to split in two. It spun-off its North American grocery business in order to get a better multiple for its higher growth snack food business. After the split, the larger segment became Mondelez while the smaller portion became Kraft Foods Group which got the Kraft cheese products, Maxwell House coffee, Jell-O, and Planters nuts, among other brands. Mondelez is based in Deerfield, IL, just outside of Chicago.
Turning to today's news, let's start with the earnings. Non-GAAP EPS grew 12% YoY and 19% on a constant currency basis to $0.48. Revenue fell 5.0% year/year to $5.99 bln. EPS came in better than expected while revenue was basically in-line. MDLZ says it was pleased to deliver strong margin expansion and double-digit EPS growth despite the revenue impact from a malware incident at the end of June. On CNBC this morning, Mondelez's CEO estimated that the malware attack may have shaved $140 mln in revenue due to disruptions to shipping and invoices.
In terms of the new CEO news, MDLZ has named Dirk Van de Put, current President and CEO of McCain Foods, to succeed Irene Rosenfeld as CEO of Mondelez Intl, as she steps down effective November 2017. Van de Put will also join the company's Board of Directors. Rosenfeld will continue as Chairman of the Board until March 31, 2018, at which point she will retire and Van de Put will assume the role of Chairman and CEO. He joins Mondelez from McCain Foods, a $9.1 billion CAD ($7.3 billion USD) privately held Canadian company that is the largest manufacturer of frozen french fries, potato specialties and appetizers with sales in more than 160 countries. During his six-year tenure as CEO, he grew net sales by more than 50%. Prior to joining McCain, Van de Put held executive positions with Novartis, Groupe Danone, Coca-Cola and Mars.
And finally, in terms of the dividend, the company is boosting its quarterly dividend to $0.22 per share, an increase of 16%. They new annual yield is now about 2.0%. MDLZ also noted that it repurchased approximately $600 mln of its stock in Q2.
In sum, the stock is trading lower, most likely on the CEO news. It seems to have caught investors off guard and it creates some uncertainty. Also, Van de Put comes from a company that makes french fries, but consumers are moving away from unhealthy foods. So there may be some concern as to whether he has the right experience to take MDLZ to the next level in snacks. With that said, it's probably good to get new leadership as many investors have complained that the stock has been stuck in neutral for too long.