Mondelez International sells biscuits, baked snacks and chocolate, including Oreo, Ritz, Cadbury and Milka. In the second quarter ended June 30, 2026, reported operating profit rose 66%, while combined operating profit across its four geographic businesses fell 10.1%. Changes in the value of hedging contracts explain that divide: demand improved in several markets, while Europe and rising selling costs continued to weigh on the business. The recovery therefore depends on turning stronger customer demand into profit and cash, rather than repeating the quarter’s accounting gains.
Source: Mondelez second-quarter 2026 Form 10-Q, statements of earnings, Note 14 and management’s discussion, pages 1, 22–25 and 33–43; July 28, 2026 earnings release, company description.
Reporting basis: This analysis uses consolidated U.S. GAAP accounts for Mondelez and its controlled subsidiaries. Quarterly comparisons cover April–June; first-half comparisons cover January–June. Balance-sheet comparisons are June 30, 2026 against December 31, 2025. The information cutoff is July 28, 2026, including that day’s earnings release and outlook. Later developments are outside this assessment.
1. The large profit increase came mainly from hedging accounts
Reported profit improved much faster than the businesses that make and sell snacks. Operating profit reached $1.946 billion, up from $1.172 billion a year earlier. Yet combined regional operating profit declined from $1.372 billion to $1.233 billion.
Mondelez buys commodity and currency contracts to reduce uncertainty over future purchasing costs. Some contracts change reported profit as their market values change, before the ingredients they protect enter the cost of products sold. The company excludes specified unrealized changes from regional results and its adjusted earnings measures until the related gains or losses are realized.
The second quarter included an $827 million operating gain from these mark-to-market adjustments, compared with a $93 million loss a year earlier. That $920 million favorable swing exceeded the entire $774 million increase in reported operating profit. Lower regional profit, higher corporate expenses and lower intangible amortization explain the remaining net movement.
| Consolidated results, U.S. dollars in millions except EPS and margins | Second quarter 2025 | Second quarter 2026 | First half 2025 | First half 2026 |
|---|---|---|---|---|
| Revenue | 8,984 | 9,355 | 18,297 | 19,435 |
| Gross profit | 2,937 | 3,986 | 5,367 | 6,789 |
| Operating profit | 1,172 | 1,946 | 1,852 | 2,754 |
| Operating margin, calculated | 13.0% | 20.8% | 10.1% | 14.2% |
| Net earnings attributable to Mondelez | 641 | 1,548 | 1,043 | 2,108 |
| Diluted EPS, U.S. dollars | 0.49 | 1.20 | 0.80 | 1.64 |
| Adjusted operating profit, non-GAAP | 1,283 | 1,222 | 2,657 | 2,404 |
| Adjusted operating margin, company presentation | 14.3% | 13.1% | 14.5% | 12.4% |
Source: 2026 Form 10-Q, page 1 and operating-income reconciliations, pages 34–38. First-half 2025 adjusted operating profit uses the comparative amount in the 2026 filing.
The same distinction holds for the first half. Reported operating profit rose $902 million, while the operating mark-to-market comparison improved by $1.316 billion. The four regions together earned $415 million less. The quarterly rebound is therefore not evidence that the full cost pressure of the previous year has passed.
Net earnings also benefited from a lower pension charge. In the second quarter of 2025, transferring responsibility for a U.S. pension plan to insurers produced a $282 million noncash pretax settlement loss. That specific loss did not recur. Total benefit-plan non-service income moved from a $264 million expense to $27 million income, adding $291 million to the pretax comparison.
Taxes supplied another favorable influence. The quarterly effective tax rate fell from 26.9% to 19.2%, reflecting where earnings arose, derivative gains and losses, and benefits from a legal-entity reorganization and an amended U.S. return. These disclosed causes do not establish a permanent tax rate. Tax expense still rose in dollars because pretax earnings were much higher.
The company’s adjusted results provide a useful second view, but they also remove real costs. Adjusted quarterly operating profit fell 4.8%; adjusted earnings per share (EPS) remained $0.73, or $0.71 after removing favorable currency effects. Management’s constant-currency EPS bridge shows that a $0.03 tax benefit partly offset a $0.04 operating decline and $0.01 from higher net interest and other expense. Flat adjusted EPS therefore did not mean operating profitability was unchanged.
Enterprise resource planning (ERP) implementation and restructuring also consume resources even when excluded from adjusted profit. Their expenses include cash-related costs, such as consulting and severance, as well as noncash charges, such as accelerated depreciation of existing systems. Excluded expense is therefore not the same as cash paid during the period.
Source: 2026 Form 10-Q, Notes 7 and 12, pages 17–18 and 21; non-GAAP definitions and reconciliations, pages 29–38. Detailed adjustment arithmetic appears in the calculation notes below.
2. Demand improved, but Europe remained the decisive weakness
Growth became less dependent on price increases, although Europe still lost sales on an organic basis. Mondelez’s organic revenue measure removes acquisitions, divestitures and currency-related effects. The last category also includes unusually large price increases in Argentina, which management said had no material effect on its non-GAAP measures in the quarter or first half of 2026. In the second quarter, it grew 2.2%: pricing contributed 1.5 percentage points and volume/mix contributed 0.7 points. Volume/mix combines quantities sold with the mix of products, so it should not be read as a pure increase in physical units.
The reported revenue increase was larger, at 4.1%. Currency-related items added $183 million; the comparison also lost $10 million of prior-year divested revenue. First-half organic growth was 2.6%, consisting of 2.5 points from pricing and just 0.1 point from volume/mix. The quarter’s improvement matters because the half-year total still shows little overall demand growth beyond prices.
There is a meaningful historical shift. In the second quarter of 2025, organic revenue grew 5.6% despite a negative 1.5-point volume/mix contribution. Growth then relied on stronger pricing. Meanwhile, adjusted operating margin was 17.9% in the second quarter of 2024, 14.3% in 2025 and 13.1% in 2026. Demand is improving from the price shock, but profit earned on each sales dollar has not recovered to the earlier level.
Sources: 2026 Form 10-Q, pages 33–38; July 29, 2025 earnings release, highlights and Schedule 5a. Historical adjusted margins are management’s non-GAAP presentations for those respective periods, not a constant-currency margin series.
| Geographic business; revenue and profit in U.S. dollars in millions | Second-quarter 2026 revenue | Second-quarter organic growth, calculated from disclosed drivers | Second-quarter 2025 segment profit | Second-quarter 2026 segment profit |
|---|---|---|---|---|
| Latin America | 1,374 | 8.4% | 133 | 166 |
| Asia, Middle East and Africa | 1,971 | 7.1% | 271 | 254 |
| Europe | 3,377 | −3.5% | 514 | 382 |
| North America | 2,633 | 3.4% | 454 | 431 |
Source: 2026 Form 10-Q, Note 14 and regional discussions, pages 22–25 and 40–43.
Reporting basis: Segment profit excludes specified derivative marks, corporate expenses, intangible amortization and other centrally reported items. It is not consolidated operating profit or a uniform measure of recurring profit. Organic growth equals the region’s disclosed pricing plus volume/mix contributions, subject to rounding.
Europe explains $132 million of the $139 million decline in combined quarterly regional profit. Its segment margin fell from a calculated 15.1% to 11.3%. Volume/mix reduced sales growth by 2.1 points, and net pricing reduced it by another 1.4 points. The filing attributes continued chocolate volume weakness to consumers’ reaction to earlier price increases. Current lower net pricing had not yet restored growth.
That weakness is concentrated in an important product. European chocolate revenue fell from $1.589 billion to $1.517 billion, even though currency helped the region’s overall sales. The figures do not separately measure chocolate profit, but they show that an important source of European revenue was still shrinking. Higher promotion, overhead, systems implementation and restructuring expenses further reduced regional earnings.
Latin America provided the clearest offset. Pricing contributed 7.9 points and volume/mix 0.5 points to quarterly growth. Profit rose $33 million as pricing, manufacturing productivity and currency benefits outweighed higher ingredients and selling costs. Demand was uneven: Mexico and Argentina grew in volume, while Brazil declined. This is a successful regional offset, not evidence of uniformly stronger consumption.
Asia, Middle East and Africa had the strongest volume/mix contribution, at 5.2 points. Yet profit fell $17 million as raw materials, selling costs, promotion and conflict-related costs outweighed the benefit. North America’s positive 1.2-point volume/mix contribution was driven mainly by favorable product mix in biscuits and baked snacks. Its profit still declined, partly because the prior year benefited more from changes in acquisition earn-out estimates.
The product portfolio spreads these pressures. Biscuits and baked snacks generated $4.735 billion of quarterly revenue, chocolate $2.721 billion, and gum and candy $1.067 billion. Together, biscuits and chocolate represented approximately 80% of sales. Gum and candy added $117 million of revenue, providing diversification. Europe accounted for most of the regional profit decline, but the filing does not separate chocolate’s profit contribution from the effects of other products, pricing and regional expenses. Mondelez needs the improving demand outside Europe to translate into earnings while European sales stabilize.
Source: 2026 Form 10-Q, product revenue table, page 25, and regional explanations, pages 40–43. Product comparisons use the filing’s reclassified 2025 presentation.
3. Lower cocoa prices help only as purchasing costs reach the income statement
The immediate profit obstacle broadened from ingredients to selling and support costs. In the second quarter, management’s constant-currency adjusted operating-profit bridge shows $137 million of pricing benefit against $56 million of higher input costs. Constant currency holds exchange rates at the prior-year level to isolate business changes. Across the full first half, pricing of $463 million did not cover $496 million of higher inputs.
The quarter nevertheless lost adjusted profit because selling, general and administrative expenses rose $182 million on the comparable basis used in management’s bridge. These expenses include the people and activities needed to sell, advertise and run the business. Higher advertising and consumer promotion were part of the increase, alongside other selling and administrative expenses. The filing does not quantify how much of that increase went to promotion versus other expenses.
| Second-quarter adjusted operating-profit bridge, constant currency; U.S. dollars in millions | Change |
|---|---|
| Second-quarter 2025 adjusted operating profit | 1,283 |
| Pricing, input costs and volume/mix, net | +92 |
| Selling costs, amortization and fixed-asset impairments, net | −170 |
| Second-quarter 2026 adjusted operating profit at constant currency | 1,205 |
Source: 2026 Form 10-Q, page 34.
Calculation notes: +92 = +137 pricing −56 inputs +11 volume/mix; −170 = −182 selling and administrative expenses +13 lower amortization −1 impairments. Currency added $17 million to reach $1.222 billion of adjusted operating profit at reported exchange rates.
The cocoa mechanism is slower than a market-price chart suggests. Mondelez contracted some purchases and hedges at earlier prices. Those arrangements improve cost visibility, but they also delay the benefit when market prices fall. Management explicitly says previously contracted positions limited the benefit of lower cocoa prices in the quarter. Packaging, nuts, energy and other ingredients added pressure, while dairy, sugar and manufacturing productivity provided some relief.
Industry evidence supports both the easing in supply pressure and the continuing demand problem. The International Cocoa Organization’s May 2026 bulletin estimated a 48,000-tonne surplus for the 2024/25 cocoa year, following a 492,000-tonne deficit in 2023/24. That improvement combined higher production with lower processing demand. It was a recovery from an exceptional shortage, rather than proof of a plentiful long-term supply cushion.
Source: ICCO May 2026 Quarterly Bulletin, May 29, 2026, world cocoa balance table. Cocoa years run October–September; these are estimates available at the analysis cutoff.
Chocolate processor Barry Callebaut offered an operational comparison on July 9. Its volumes fell 2.8% in the nine months ended May 31, although its third quarter returned to 5.7% growth. Its Global Chocolate volume remained down 2.3% over nine months. Management linked the quarterly improvement to stronger cocoa demand after falling prices, continued growth in Asia, the Middle East and Africa, and better North American service. It also identified a low prior-year comparison, customer restocking and one-off cocoa-butter opportunities within Global Cocoa. These factors support uneven stabilization, but some reflect temporary purchasing or company-specific service recovery. They do not establish a broad recovery in demand for Mondelez’s branded retail snacks, and the reporting periods differ.
Source: Barry Callebaut nine-month sales announcement, July 9, 2026, group and Global Chocolate discussion.
For Mondelez, lower contracted costs reaching production could eventually support margins or give it room to offer consumers better prices. Europe shows the condition that matters: price relief must encourage enough additional purchasing to offset the lower revenue per product. Higher promotion also has to produce sufficient sales and profit. The filing establishes early demand improvement, but not yet that these benefits cover the full selling-cost increase.
Source: 2026 Form 10-Q, pages 34, 37, 42 and 45–46.
4. Higher earnings did not produce more operating cash
Cash generation weakened modestly despite the large reported earnings increase. First-half operating cash was $1.322 billion, down from $1.400 billion. Gains recorded in profit do not necessarily represent customer payments or cash available for investment.
To reconcile net earnings with operating cash flow, the company subtracted $509 million of unrealized derivative gains in 2026 and added back $800 million of unrealized losses in 2025. These adjustments remove gains and losses that changed profit without representing cash received or paid in the period. Depreciation and amortization added back $693 million because the cash for those assets is paid separately from the gradual expense recognized in profit. Stock compensation and deferred taxes also separate the timing of accounting earnings from cash payments.
| First-half profit-to-cash reconciliation, U.S. dollars in millions | 2025 | 2026 |
|---|---|---|
| Consolidated net earnings, including noncontrolling interests | 1,051 | 2,116 |
| Noncash and investment-distribution adjustments, net | 1,544 | 437 |
| Receivables, inventories, payables and other current accounts, net | −1,433 | −1,132 |
| Pension and postretirement asset/liability changes | +238 | −99 |
| Operating cash flow | 1,400 | 1,322 |
Source: 2026 Form 10-Q, cash-flow statement, page 5. Grouped lines are calculated from the individual statement entries; all inputs are retained in the calculation notes.
Amounts owed to Mondelez absorbed cash rather than releasing it. The cash-flow statement’s net receivables line used $424 million, versus releasing $536 million a year earlier—a $960 million unfavorable swing. A sale can enter revenue before payment arrives, so growing receivables can hold back cash generation. This line covers receivables more broadly than customer invoices, however, and does not establish that customers paid more slowly or became less creditworthy.
Inventory absorbed only $16 million of cash, compared with $775 million a year earlier. This $759 million improvement largely offset the receivables swing. Changes in accounts payable used $538 million, versus $177 million; these are net movements in supplier obligations, not total supplier payments. Other current liabilities used $296 million, substantially less than the prior year’s $1.125 billion.
Together, current operating accounts consumed $301 million less cash than in 2025. But pension and postretirement account changes became $337 million less favorable, while net earnings plus the table’s noncash and investment-distribution adjustments fell $42 million. Those three movements reconcile the $78 million decline in operating cash flow.
Two financing practices help explain the payment picture. Receivables already sold under nonrecourse factoring arrangements declined from $674 million at year-end to $585 million. Factoring brings collections forward by selling customer invoices to financial institutions. Supplier-finance obligations confirmed as valid declined from $3.6 billion to $2.9 billion and remained classified within accounts payable. These arrangements affect the timing of cash around customers and suppliers; they should not be counted a second time as separate borrowing in the cash reconciliation.
The trade-receivable allowance fell from $35 million to $30 million through a $4 million net recovery for expected credit losses and $1 million of currency and other movement. That small change does not explain the much larger cash swing. The useful conclusion is that cash depends heavily on collection and payment timing, even as credit-loss expense remains small.
Source: 2026 Form 10-Q, page 5 and Note 1, pages 6–7.
5. Lower buybacks preserved funding room for investment and dividends
Mondelez covered capital spending from operating cash, but not capital spending plus shareholder payments. Cash remaining after equipment and other capital purchases was $668 million, down from $818 million. This is free cash flow defined as operating cash minus the cash-flow statement’s capital expenditures.
| First-half cash allocation, U.S. dollars in millions | 2025 | 2026 |
|---|---|---|
| Operating cash flow | 1,400 | 1,322 |
| Capital expenditures, cash paid | 582 | 654 |
| Free cash flow, calculated | 818 | 668 |
| Cash dividends paid | 1,233 | 1,287 |
| Cash spent on share repurchases | 1,653 | 212 |
| Free cash flow less dividends and repurchases | −2,068 | −831 |
Source: 2026 Form 10-Q, page 5 and liquidity discussion, pages 44–45. All spending rows are positive uses of cash. Free cash flow excludes other investing transactions and is a non-GAAP calculation.
Repurchases return cash to selling shareholders and can increase remaining shareholders’ proportional ownership by reducing the shares outstanding. They can also offset shares issued through employee awards. Mondelez’s program is discretionary; the filing does not identify a specific reason for the lower first-half pace. Buyback cash fell by $1.441 billion, materially reducing the funding gap while capital spending and dividends increased. The company still took in a net $454 million from the debt-related cash-flow lines and used some opening cash. Net investing outflow also included $91 million of derivative settlements, partly offset by investment and asset-sale proceeds. The complete movement was $1.322 billion operating inflow, $716 million investing outflow, $1.039 billion financing outflow and a $3 million exchange loss.
Those movements reduced cash including restricted amounts from $2.195 billion to $1.759 billion. Of the closing amount, $43 million was restricted, leaving $1.716 billion of cash and equivalents. Keeping restricted cash in the reconciliation prevents the $436 million total decline from being confused with the $409 million decline in the balance-sheet cash line.
The dividend decision adds to future cash needs. On July 28, Mondelez declared a quarterly dividend of $0.52 per share, up 4% from $0.50, payable October 14. This increases cash distributed per share while buybacks remain discretionary. The declaration is outside the first-half cash payments shown above.
Source: 2026 Form 10-Q, liquidity discussion, page 45.
Capital spending has an identified purpose. Management describes modernizing factories, enabling new-product manufacturing and improving productivity. First-half cash spending rose to $654 million, with the largest regional amounts in Europe and Latin America. Management expected up to $1.4 billion for the full year. Those projects can improve production and supply capability, but the filing does not split spending into maintenance and growth.
The cash amount also includes payment timing. It included $481 million accrued but unpaid at the previous year-end, while $346 million remained unpaid at June 30. Owned-asset depreciation was $450 million; the broader $693 million cash-flow add-back also includes amortization. Comparing either depreciation measure with spending cannot establish the amount of new capacity purchased.
Source: 2026 Form 10-Q, pages 5, 8, 24 and 44.
The $1.2 billion systems transformation is intended to upgrade global enterprise and supply-chain systems. Management expects completion by the end of 2028, and most program spending is expected to be operating expense. First-half implementation expense reached $108 million, versus $70 million. This is part of the cost of renewing the company’s operating infrastructure; removing it from adjusted earnings does not remove its demands on resources.
Europe’s restructuring similarly seeks to lower overhead and improve the supply network. New actions generated $59 million of first-half charges but only $18 million of payments. The liability rose from $23 million to $63 million after currency effects, leaving further cash costs ahead. The filing does not quantify expected savings. Lower buyback spending provides flexibility while these investments and restructuring actions work through the business.
Source: 2026 Form 10-Q, Note 11, page 21, and systems implementation discussion, pages 27 and 31.
6. Liquidity is supported by credit access, with more debt coming due soon
The financing position remains manageable, but near-term refinancing needs increased. Total debt rose from $21.205 billion to $21.450 billion. More significantly, the current portion of long-term debt increased from $1.295 billion to $2.663 billion. Alongside $2.327 billion of short-term borrowing, this leaves $4.990 billion classified as current financing obligations.
| Consolidated financial position, U.S. dollars in millions | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Cash and equivalents | 2,125 | 1,716 |
| Trade receivables, net | 3,903 | 4,010 |
| Inventories | 4,419 | 4,405 |
| Property, plant and equipment, net | 10,667 | 10,649 |
| Goodwill and intangible assets, combined | 43,964 | 43,689 |
| Accounts payable | 10,139 | 9,411 |
| Short-term borrowings | 2,688 | 2,327 |
| Current portion of long-term debt | 1,295 | 2,663 |
| Long-term debt, excluding current portion | 17,222 | 16,460 |
| Total assets | 71,487 | 71,247 |
| Total liabilities | 45,596 | 44,555 |
| Total equity | 25,891 | 26,692 |
Source: 2026 Form 10-Q, balance sheets and Note 5, pages 3 and 10–11.
Available committed revolving facilities totaled $6 billion and were undrawn. These support working capital and the commercial-paper program; they are borrowing capacity, not cash already earned. The $1.5 billion facility expires in February 2027, while $4.5 billion runs to February 2030. Commercial paper totaled $2.285 billion, so maintaining access to these facilities and short-term markets remains part of the funding model.
The lending covenant requires at least $25 billion of shareholders’ equity under a special definition excluding accumulated other comprehensive income or losses and certain other effects. Mondelez reported compliance. Ordinary reported equity is therefore not the covenant test. The facilities have no credit-rating triggers requiring collateral, which limits one potential source of sudden cash demand.
April’s Swiss-franc notes raised approximately $1.074 billion, with maturities in 2029, 2032 and 2036 and coupons of 0.958%, 1.271% and 1.625%. They spread repayment dates. Their local-currency coupons alone do not measure the full dollar funding cost after currency and hedging effects. Actual first-half interest expense was $292 million, versus $288 million; the much lower $138 million “interest and other expense, net” line includes $154 million of other income.
Source: 2026 Form 10-Q, Note 5 and liquidity discussion, pages 10–11 and 45.
The annual maturity schedule provides longer context: at December 2025, debt including finance leases had scheduled maturities of $1.740 billion in 2027, $2.121 billion in 2028 and $2.246 billion in 2029. These are year-end amounts, before 2026 financing and exchange movements. Operating leases separately required $907 million of undiscounted future payments, including $206 million in 2026; finance leases required $465 million. Finance-lease obligations are already within debt, so adding them again would double-count them.
Source: 2025 Form 10-K, Notes 5 and 8, pages 75 and 79.
At June 30, operating-lease assets were $732 million and long-term operating-lease liabilities $609 million. New noncash lease obligations included $105 million of operating and $102 million of finance leases during the half. These commitments sit alongside factory investment in the funding plan. Credit access and the reduced buyback pace support liquidity, while the higher current debt balance makes cash generation and refinancing more important over the following year.
Source: 2026 Form 10-Q, pages 3 and 7.
7. Equity improved, while brands remain a large part of the asset base
The balance sheet strengthened through retained profit, but much of its asset value rests on acquired businesses and brands. Total assets declined only $240 million. Cash fell and goodwill declined, while receivables and some derivative assets increased. Inventory was broadly stable: raw materials rose $17 million and finished products fell $31 million.
Other current assets rose $260 million, despite restricted cash declining. Within that account, derivative assets increased $543 million, while net variation-margin assets fell $277 million. Variation margin is cash posted to or received from brokers as futures values change. The account therefore reflects changes in hedging contracts as well as operating payments.
Goodwill—the acquisition cost assigned to benefits beyond separately identified assets—declined $156 million entirely through currency translation. Combined goodwill and intangibles still represented a calculated 61.3% of assets. Management found no impairment indicators in the second quarter, but five brands carried $1.5 billion of book value and had estimated values less than 10% above their book values at the 2025 annual test. Weaker future sales or profit assumptions could therefore produce a write-down. Such a charge would reduce accounting equity without itself requiring a new cash payment, while signaling lower expected business performance.
Source: 2026 Form 10-Q, Notes 2, 4 and 6, pages 8–9 and 12.
Shareholders’ equity attributable to Mondelez rose $801 million to $26.639 billion. Retained earnings increased $820 million because $2.108 billion of attributable profit exceeded $1.288 billion of declared dividends. Accumulated other comprehensive losses narrowed $81 million. This account records specified changes directly in equity rather than through net earnings. Across Mondelez and its noncontrolling interests, other comprehensive income totaled $75 million, led by pension adjustments of $50 million and currency translation of $19 million. The parent’s $81 million gain was partly offset by a $6 million loss attributable to noncontrolling interests. Stock awards and options added $110 million across paid-in capital and treasury stock, while repurchases reduced equity by $210 million.
The share mechanics matter. Issued shares stayed at approximately 1.997 billion; repurchased shares were held in treasury rather than shown as retired. Treasury shares increased by only about 1.039 million net, because award-related share activity offset part of repurchases. First-half diluted average shares fell from 1.301 billion to 1.286 billion, modestly helping EPS. Management’s constant-currency adjusted EPS bridge attributes $0.01 of benefit to the lower share count.
Stock compensation expense increased from $65 million to $87 million. It is added back in operating cash because it is not a current cash wage payment, but it creates potential dilution. The cash-flow statement records $212 million paid for repurchases, while the equity statement and program disclosure record $210 million of purchases. Of the program purchases, $18 million settled in July, leaving $192 million paid during the first half for those purchases. That disclosure alone does not reconcile the $212 million cash-flow total. The cash-allocation analysis therefore uses the reported $212 million cash outflow, and the equity reconciliation uses the reported $210 million equity reduction. For the business, lower buybacks conserved cash while retained earnings rebuilt equity.
Source: 2026 Form 10-Q, pages 2–5, Note 9, pages 19–20, Note 13, pages 21–22, and EPS bridge, page 38.
8. The outlook requires a stronger second half, with identifiable constraints
Management’s cash target requires a rebound after June, but slightly less free cash flow than in the second half of 2025. On July 28, Mondelez expected at least 2% full-year organic revenue growth, flat to 5% adjusted EPS growth at constant currency, and approximately $3 billion of free cash flow. These are management forecasts, not reported results. The outlook excludes potential tariff changes affecting trade qualifying under the United States–Mexico–Canada Agreement (USMCA).
Source: July 28, 2026 earnings release, “2026 Outlook.”
With $668 million of first-half free cash flow, reaching approximately $3 billion would require roughly $2.332 billion in the second half. If annual capital spending reaches management’s $1.4 billion ceiling, remaining spending would be $746 million. Under those two assumptions, second-half operating cash would need to be approximately $3.078 billion. These are funding calculations, not independent forecasts.
The prior-year comparison changes how demanding that requirement looks. Mondelez generated $2.417 billion of free cash flow in the second half of 2025, more than the $2.332 billion needed in 2026. The target therefore calls for a large increase from the first half, but not an increase over the comparable prior-year period. Recovering cash generation to near that earlier level would be enough; the first-half shortfall alone does not show that the target requires an exceptional operating recovery.
| Second-half cash comparison, U.S. dollars in millions | 2025 actual, calculated | 2026 required under stated assumptions |
|---|---|---|
| Operating cash flow | 3,114 | 3,078 |
| Capital expenditures, cash paid | 697 | 746 |
| Free cash flow | 2,417 | 2,332 |
Sources: 2025 Form 10-K, cash-flow statement, page 64; 2026 Form 10-Q, comparative first-half cash flows, page 5, and capital-spending outlook, page 44; July 28, 2026 earnings release, “2026 Outlook.”
Calculation notes: Second-half 2025 operating cash = 4,514 −1,400 = 3,114; capital spending = 1,279 −582 = 697; free cash flow = 3,114 −697 = 2,417. The 2026 calculation assumes approximately $3 billion of annual free cash flow and capital spending at the $1.4 billion ceiling.
The operating route is clear. Better demand in Asia and Latin America must generate profit after selling costs. Europe needs price and promotion decisions to restore purchasing without surrendering more margin than additional sales earn. Lower cocoa costs can help as old purchasing positions pass through production, while factory and systems investments seek to improve the company’s ability to supply customers efficiently.
Several concrete exposures could interrupt that route. Russia contributed 3.8% of second-quarter revenue and remained consolidated. Management continued to suspend new capital investment and advertising there, but warned of asset loss, restrictions and possible deconsolidation. In the Middle East, route changes and disruption around Bahrain increased operating complexity; affected countries represented less than 1% of quarterly revenue, and management said the overall impact had not been material to date.
Trade costs are another condition, not an assumed windfall. Mondelez reported paying approximately $20 million of IEEPA tariffs and receiving about $6 million in refunds by June 30. It had not recorded additional anticipated refunds. The filing also identifies cocoa traceability and deforestation rules as potential supply constraints. These matters can affect sourcing costs and product availability independently of the headline cocoa price.
Source: 2026 Form 10-Q, developments and commodity discussion, pages 26–28 and 45–46. Tariff statements describe the company’s position at the July 28 cutoff.
The contingency notes add obligations that should remain visible. The private wheat-futures class action remained unresolved, and Mondelez expected to bear monetary payments under its separation agreement with Kraft. The filing does not provide a usable loss estimate for that case. For matters without a recorded provision, reasonably possible losses were either not estimable or judged immaterial. Management did not expect the pending legal and regulatory matters, individually or together, to materially harm the company’s finances, but acknowledged that unfavorable outcomes could do so. Tax proceedings likewise could create additional liabilities.
Acquisition earn-outs are a different risk. Total contingent consideration stood at $156 million, while the Clif Bar arrangement allowed payments up to $2.4 billion if demanding performance targets were achieved. The maximum is conditional, not a currently payable bill or a forecast. Its economic meaning differs from a legal loss: stronger acquired-business performance could itself generate a larger payment.
Source: 2026 Form 10-Q, Notes 6 and 8, pages 16 and 18.
9. Mondelez has room to fund recovery, but the recovery is incomplete
The business is stabilizing in demand before it is recovering in profitability and cash. Positive quarterly volume/mix, Latin America’s profit growth and a smaller pricing-versus-input-cost burden provide real support for improvement. Europe’s falling organic sales, lower combined regional profit and higher selling expenses are the strongest counterevidence.
Mondelez’s broad product and geographic base allows it to keep funding factories, brands and systems while one major region struggles. Undrawn credit and sharply lower buybacks provide additional room. But the first half did not internally fund capital investment and shareholder payments together, and more debt is classified as due within a year.
The decisive business test is whether improved demand and lower purchasing costs can raise regional profit after promotion and overhead, then release enough cash to fund the investment program. Until that happens, the large reported earnings rebound chiefly improves the accounting comparison. It does not yet demonstrate that Mondelez has completed its recovery from the cocoa and pricing shock.
Technical calculation and source notes
- Filing identity: Mondelez International, Inc., CIK 0001103982; Form 10-Q; accession 0001628280-26-050179; filed July 28, 2026; period ended June 30, 2026. SEC filing index. Consolidation includes controlled subsidiaries, eliminates intercompany transactions and excludes the deconsolidated Venezuelan subsidiaries; significant-influence investments use the equity method.
- Cash-flow reporting basis: Cash-flow figures cover the consolidated company for January 1–June 30, 2026, in U.S. dollars rounded to millions. The cash-flow statement on page 5 starts with $2.116 billion of consolidated net earnings, including noncontrolling interests; the earnings statement on page 1 separately reports $2.108 billion attributable to Mondelez. Calculations use the statement entries and their displayed signs. Related machine-readable source: SEC XBRL instance.
- Growth and margins: Growth = current/comparable prior period −1. Quarterly revenue growth = 9,355/8,984 −1 = 4.1%; operating-profit growth = 1,946/1,172 −1 = 66.0%. First-half revenue growth = 19,435/18,297 −1 = 6.2%. Operating margin = operating profit/revenue. European segment margins = 514/3,412 and 382/3,377. Biscuits plus chocolate share = (4,735 +2,721)/9,355 = 79.7%. Goodwill/intangibles share = (24,180 +19,509)/71,247 = 61.3%.
- Reported operating-profit bridge, U.S. dollars in millions: 1,172 +920 derivative-mark change −139 regional profit change −19 corporate-expense change +12 lower amortization = 1,946. First half: 1,852 +1,316 derivative-mark change −415 regional profit change −22 corporate-expense change +22 lower amortization +1 divestiture gain = 2,754. These are consolidated reconciliations, not sums of unadjusted subsidiary profits.
- Adjusted operating profit: Quarterly 2026: 1,946 +9 restructuring −827 derivative marks +13 acquisition items +0 divestiture items +11 conflicts +59 ERP +11 monetary remeasurement = 1,222. Quarterly 2025: 1,172 −4 +93 −21 −3 +1 +37 +8 = 1,283. First-half 2026: 2,754 +56 −554 +7 −1 +18 +108 +16 = 2,404. First-half 2025: 1,852 −6 +762 −29 −8 +1 +70 +15 = 2,657. These are management’s exclusions, not a claim that all remaining income recurs. The 2026 filing’s comparative first-half adjustment uses an $8 million divestiture deduction, versus $7 million in the original 2025 release; the analysis consistently uses the 2026 presentation.
- Pretax and after-tax scope: The quarterly $827 million derivative-mark gain carried $172 million tax expense, leaving $655 million after tax. The prior $93 million loss carried a $16 million tax benefit, leaving a $77 million after-tax loss. The separate $282 million pension-plan settlement is pretax; it is not equated with total pension participation adjustments. Operating-mark adjustments of $554 million and $762 million for the respective first halves differ from the all-earnings comparability amounts of $553 million and $766 million because the latter include nonoperating effects. Cash-flow unrealized derivatives are another scope.
- Adjusted EPS: At disclosed cent precision, quarterly 2026: 1.20 −0.51 derivative marks +0.01 acquisitions +0.01 conflicts +0.03 ERP +0.01 remeasurement −0.02 tax-law effects = 0.73. Quarterly 2025: 0.49 +0.06 −0.01 +0.02 ERP +0.01 remeasurement +0.16 pension participation = 0.73. First-half 2026: 1.64 +0.03 restructuring −0.34 derivative marks +0.01 acquisitions +0.01 conflicts +0.06 ERP +0.01 remeasurement −0.02 tax-law effects = 1.40. First-half 2025: 0.80 +0.47 derivative marks −0.01 acquisitions +0.04 ERP +0.01 remeasurement +0.16 pension participation = 1.47. Currency adjustments reduce 2026 amounts to 0.71 and 1.34. Individual per-share items are rounded and omit displayed zero adjustments.
- Profit-to-cash grouping, U.S. dollars in millions: 2026 noncash/investment adjustments = 693 +87 +149 +10 −1 +3 −37 +44 −509 +3 −5 = 437. The 2025 group = 663 +65 −69 +9 −35 +44 +800 −38 +105 = 1,544. Current-account changes: 2026 = −424 −16 −538 +142 −296 = −1,132; 2025 = +536 −775 −177 +108 −1,125 = −1,433. Thus 2,116 +437 −1,132 −99 = 1,322; 1,051 +1,544 −1,433 +238 = 1,400. Balance-sheet changes also include currency and other effects and are not substituted for these cash-flow entries.
- Cash allocation: Free cash flow = 1,322 −654 = 668, versus 1,400 −582 = 818. Cash shareholder payments = 1,287 +212 = 1,499; shortfall against free cash flow = 831. Net debt cash inflow = 1,584 −587 −1,313 +1,074 −304 = 454. Other investing flows excluding capex = +1 +179 −270 +25 +3 = −62. Closing cash including restrictions = 2,195 +1,322 −716 −1,039 −3 = 1,759 = 1,716 unrestricted +43 restricted. Outlook sensitivity: 3,000 −668 = 2,332 second-half free cash flow; 1,400 −654 = 746 capital spending; 2,332 +746 = 3,078 operating cash.
- Balance sheet and equity: June assets 71,247 = liabilities 44,555 +equity 26,692; December assets 71,487 = 45,596 +25,891. Parent equity: 25,838 +2,108 earnings +81 other comprehensive income +110 awards/options −210 repurchases −1,288 declared dividends = 26,639. Retained earnings: 36,413 +2,108 −1,288 = 37,233. Paid-in capital: 32,322 +11 = 32,333. Treasury-stock cost: −31,533 +99 −210 = −31,644. Parent accumulated other comprehensive losses: −11,364 +81 = −11,283. Noncontrolling equity remained 53; its earnings, comprehensive losses and distributions reconcile separately.
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