Deerfield-based Oreo cookie maker Mondelez International Inc. reported a better-than-expected profit Wednesday and sharply raised its stock buyback authorization, a move intended to placate investors.
The increase in authorized share repurchases to $6 billion from $1.2 billion comes after activist investor Nelson Peltz said Mondelez CEO Irene Rosenfeld was "running out of time" with investors, given the company's underwhelming operating results since its split with Kraft Foods last year.
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Peltz of Trian Fund Management said he wanted PepsiCo Inc. to shed its soda business and buy Mondelez to form a global snack powerhouse.
Stock buybacks benefit investors by reducing the number of outstanding shares and boosting a company's earnings per share. As of March 31, Peltz had a $1.23 billion stake in Mondelez, according to a filing with the Securities and Exchange Commission.
Mondelez, which makes Cadbury chocolates, Trident gum and Ritz crackers, also said it's increasing its quarterly dividend by 8 percent to 14 cents. The dividend is payable Oct. 15 to shareholders of record Sept. 30.
Its stock rose 49 cents to $31.75 in after-hours trading.
Although popular cookie and chocolate brands such as Chips Ahoy and Milka performed well in the period, gum remained a challenge in developed markets such as the U.S. and Europe.
Mondelez has been trying to revive sales through a variety of factors, including marketing that focuses more on the oral care benefits of gum.
"Some of the campaigns had gotten too esoteric," CEO Rosenfeld said in a call with analysts, when asked what was ailing the gum category. But she said new packaging was helping the company gain market share.
For the quarter ended June 30, the company earned $616 million, or 34 cents per share. That compares with $1.03 billion, or 58 cents per share, a year ago, when it was still combined with Kraft Foods Group Inc.
Excluding one-time items, it earned 37 cents per share, which was 3 cents more than Wall Street forecast.
Revenue edged up to $8.6 billion, shy of the $8.63 billion analysts expected. Performance in emerging markets such as China, India and Brazil offset weaker results in North America and Europe.
Margins remained a struggle, with adjusted operating income margin declining 1.8 percentage points from a year ago. The company cited investments in sales capabilities and other factors that should help improve the figure in the second half of the year.
Looking ahead, Mondelez said it expects its revenue to grow in the low end of its forecast of 5 percent to 7 percent for the year.
The Deerfield, Ill.-based company said it still expects a full-year adjusted profit of $1.55 to $1.60 per share.
Analysts expect earnings per share of $1.55 on revenue of $35.94 billion, on average.