Mondelez InternationalMDLZ

The company reported earnings of $0.73 per share, topping the $0.68 analysts expected. Revenue hit $9.36 billion, also ahead of estimates. This growth was led by a 4 percent rise in total revenue, with particular strength in Latin America and North America. Management also raised its outlook, now expecting organic revenue growth, which excludes the effects of currency swings and acquisitions, to be at least 2 percent for the year.

This is a positive sign for the long-term view. It shows that even with high prices for ingredients like cocoa, people are still buying Oreos and Cadbury chocolate. The company also raised its dividend by 4 percent, signaling it has enough cash to keep rewarding shareholders while navigating a tough environment for food costs.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Profitability takes a hit: The company’s adjusted operating margin, which shows how much profit is made on every dollar of sales, fell 120 basis points to 13.1% this quarter. Higher costs for ingredients like cocoa and increased spending on advertising were the main reasons for the squeeze.
• Emerging markets slowing down: Organic revenue in emerging markets grew 4.4%, a sharp drop from the 11.4% growth seen just last quarter. While these regions are still growing faster than developed markets, which grew only 0.7%, the slower pace in Latin America and Asia matters because these areas are supposed to be the company's primary growth engine.
• Pricing power remains steady: Higher prices drove 1.5% of the company's overall revenue growth, helping total sales reach $9.36 billion. This shows the business can still pass some costs to shoppers, though the benefit from pricing was much smaller than the 6.2% pricing impact reported a year ago.
• North America picks up: The North American business grew organic revenue by 3.4%, an improvement over the 1.7% growth reported for the first half of the year. This region returned to growth in the number of snacks sold, with volume increasing 1.2% as shoppers bought more Oreo and Ritz products.
• Annual revenue outlook lowered: Management now expects organic revenue to grow at least 2% for the full year, a step down from the 3.0% growth rate the company was carrying entering this quarter. They maintained their profit goal of flat to 5% growth and still expect to generate approximately $3 billion in free cash flow.

Our take: A soft quarter that shows the business is feeling the weight of high cocoa prices and picky shoppers. While sales slightly beat expectations, the shrinking profit margins and lower growth in emerging markets are concerning. This quarter chips away at the growth case, as the company now expects a slower pace for the rest of the year.