MDLZ Mondelez International 10-Q 2026-09-30 section summaries

Results

The substantial increase in consolidated operating income chiefly reflected a reversal in derivative mark-to-market results. The prior-year 9M period also included a $169M gain on equity-method investment transactions, compared with a $3M loss in 2026. Effective tax rates were 24.6% in Q3 2026 versus 19.7%, and 23.1% for 9M versus 24.9%; the comparisons reflect prior-year tax benefits and current-period benefits from reorganization, amended U.S. returns and jurisdictional mix.

Segment performance and Q3 revenue by category

Q3 derivative mark-to-market results included $543M of gains versus $348M of losses, explaining why consolidated operating income rose sharply even as North American segment operating income declined. Product-category comparisons reflect a 2026 realignment of some North America products; 2025 figures were reclassified for comparability.

Cash flow and capital returns

Receivables were a $1.212B use of operating cash flow, compared with $92M in 9M 2025; inventory was an $89M use versus $967M. Repurchase activity under the $9.0B authorization was approximately 14M shares for $874M at an average $60.60 per share; about $50M settled in October, leaving approximately $5.8B authorized. Cash and commercial paper funded repurchases.

Balance sheet and financing

Tangible equity, calculated using Mondelēz shareholders’ equity less goodwill and other intangible assets, was negative $16.763B. Short-term borrowings rose to $3.653B from $2.688B, largely commercial paper. During 9M 2026 the company repaid $1.147B of notes and issued Swiss franc notes with $1.074B total USD-equivalent principal, maturing 2029–2036 at 0.958%–1.625%. Long-term debt fair value was $19.638B versus carrying value of $21.743B. The company renewed its $1.5B 364-day revolver through February 2027 and retained a $4.5B facility through 2030; it complied with the $25.0B minimum-equity covenant.

Risks, strategy and other developments

Q3 2026 brand impairment charges were $64M versus $33M; 9M impairment and exit costs were $194M versus $45M. Three biscuit and baked-snack brands were impaired due to lower performance expectations amid market conditions and strategy changes. Six brands, including those impaired, had aggregate carrying value of $1.6B and fair value less than 10% above book value, leaving them sensitive to forecast changes. Goodwill was not impaired.

Derivative fair value shifted to a $272M net asset from a $954M net liability at year-end 2025. Non-designated economic hedges produced Q3 pretax gains of $347M versus losses of $410M, and 9M gains of $382M versus losses of $943M. Supply-chain-financing obligations included in accounts payable declined to $2.9B from $3.6B; non-recourse receivables factoring principal fell to $229M from $674M. Highly inflationary markets Argentina, Türkiye, Egypt and Nigeria represented 2.7% of Q3 and 2.8% of 9M revenue.

Restructuring actions begun in late 2025, primarily in Europe, target supply-chain optimization and overhead reduction; Q3 charges were $56M and the September 30 liability was $111M. The remaining discounted multiemployer pension withdrawal liability was $281M, down from the original $491M assessment. On October 29, 2026, Mondelēz agreed to acquire a majority stake in U.S. “better-for-you” snack maker Undercover Snacks, with closing expected in Q1 2027 subject to customary conditions.

Mondelēz International — Q3 and nine months ended September 30, 2026

Mondelēz’s core business is chocolate, biscuits and baked snacks, supported by adjacent gum and candy, meals and beverages. Its strategy emphasizes consumer-led growth, operational excellence, a growth-oriented culture and sustainable snacking, using its global and local brands and distribution capabilities. Results reflect a mixed operating picture: Q3 adjusted operating income improved as input costs eased, while nine-month adjusted operating income and margin declined under higher costs and SG&A. Large derivative mark-to-market swings made GAAP operating income and earnings substantially more volatile than adjusted results.

Consolidated results

Q3 net revenue increased 2.3%; organic growth of 2.1% reflected volume/mix (+1.8 percentage points) and pricing (+0.3 points). Favorable currency contributed $25M, partly offset by lapping $9M of prior-year divestiture revenue. For 9M, net revenue increased 4.9%, including $707M of favorable currency; organic growth of 2.4% reflected pricing (+1.8 points) and volume/mix (+0.6 points). Price elasticity weighed on volume/mix in Europe and Latin America. Emerging markets outpaced developed markets: Q3 revenue was $4.072B versus $3.881B and $5.895B versus $5.863B, respectively; 9M revenue was $12.130B versus $11.242B and $17.272B versus $16.799B.

The GAAP operating-income increase was driven largely by derivative mark-to-market movements, not equivalent underlying improvement. Q3 adjusted operating margin expanded to 13.9% from 12.0%; constant-currency adjusted operating income was $1.370B versus $1.171B. Q3 improvement benefited from $329M lower input costs, $54M favorable volume/mix and $31M higher pricing, partly offset by $227M higher SG&A. For 9M, adjusted operating margin fell to 12.9% from 13.7%; constant-currency adjusted operating income was $3.688B versus $3.828B. Higher pricing and favorable volume/mix were outweighed by higher input costs and SG&A. Lower cocoa, dairy and sugar costs and productivity helped, but packaging, nuts, edible oils, energy, grains and other ingredients, as well as advertising and other expenses, pressured results.

Adjusted EPS increased in Q3 but declined for 9M. The Q3 increase reflected $0.12 per share of operating improvement and $0.01 from fewer shares, partly offset by higher taxes and interest/other expense and lower equity-method earnings. For 9M, constant-currency adjusted EPS was $2.11 versus $2.20; operating performance and taxes were the main drags, partly offset by benefit-plan non-service income, lower interest/other expense and fewer shares. The effective tax rate was 24.6% versus 19.7% in Q3, but 23.1% versus 24.9% for 9M; the year-to-date reduction reflected legal-entity reorganizations, an amended U.S. tax return and earnings mix.

Segment results — Q3

AMEA’s Q3 operating-income increase included favorable acquisition-related comparisons. North America operating income fell 18.1%; Europe revenue declined 3.3%, reflecting lower pricing and unfavorable currency. For 9M, Latin America revenue growth was driven mainly by pricing and currency, with elasticity weighing on volume/mix; AMEA benefited from volume/mix, pricing and currency. Europe and North America operating income declined amid costs including SG&A, advertising, ERP implementation and impairments.

Cash flow, investment and financing

Higher operating cash flow primarily reflected favorable working-capital changes, partly offset by lower cash-basis earnings. Investing outflows increased with derivative settlements and capital expenditures; financing outflows reflected lower borrowing proceeds and higher dividends, partly offset by lower repurchases and debt repayments. 2026 capital expenditures are expected to be up to $1.4B, mainly for manufacturing modernization, new-product manufacturing and productivity.

Total debt was $21.7B at September 30, 2026, versus $21.2B at December 31, 2025; debt-to-capitalization remained 0.45. Long-term debt had a 6.9-year weighted-average term. Average daily commercial-paper borrowings were $2.3B for 9M versus $2.2B. Of a $4.0B long-term financing authorization, $2.9B remained available. MIHN-held operations accounted for $22.1B, or 75.2%, of 9M revenue and $26.1B, or 97.8%, of consolidated net assets of $26.7B, indicating substantial operating and asset concentration.

Costs, programs and principal risks

Cocoa prices were volatile and below the prior year, but management expects cocoa costs to remain elevated relative to historical levels in the near and medium term. Aggregate 9M commodity costs rose, with higher packaging, nuts, edible oils, energy, grains and other ingredients partly offset by lower dairy and sugar costs. Hedging, forward purchasing, pricing and manufacturing and overhead controls mitigate exposure, but hedging and inventory timing delay cost impacts and can limit benefits from price declines. Limited hedging availability for some inputs, pricing lags and climate, crop-yield and regulatory risks—including the EU Deforestation Regulation—could constrain supply. Management cautions that it may not recover higher cocoa costs through pricing.

Tariffs pose risks to both revenue and cost of goods sold. Mondelēz paid approximately $20M in IEEPA tariffs while they were in effect and had received approximately $14M in refunds by September 30, 2026; further refunds are uncertain, and no additional refunds were recorded. New tariffs or trade retaliation could raise costs and disrupt markets; most imports from Mexico and Canada currently qualify for USMCA exemptions, which may not continue.

Ukraine and Russia remain consolidated; in Q3 they represented 0.3% and 3.1% of revenue, respectively. The company suspended new capital investment and advertising in Russia but continues operations, citing food-supply continuity. Middle East conflict and shipping disruptions have increased route constraints, costs and transit times; affected countries represented approximately 1.0% of Q3 revenue, with no material financial impact to date. More broadly, inflation, supply and labor constraints, currency volatility, consumer shifts, competitive pressures, cyber and climate risks, and regulatory developments could affect results.

A $1.2B multi-year ERP and supply-chain transformation was approved in July 2024, with most spending expected to be operating expense. North America and Latin America completed implementation in Q3 2026; remaining phases are planned through year-end 2028. New restructuring actions began in Q4 2025. GAAP results were also affected by noncash intangible impairments and volatile derivative mark-to-market gains/(losses); adjusted measures exclude specified items and are not substitutes for GAAP results.

Market Risk

Mondelez’s principal market risks arise from foreign-exchange rates, commodity prices, and interest rates. The company uses derivatives to mitigate potentially significant, unanticipated earnings fluctuations from currency and commodity volatility and interest-rate movements. It also periodically uses interest-rate swaps and forward contracts to adjust its desired mix of fixed- and variable-rate debt based on current and projected market conditions.

For debt and derivative details, the filing refers readers to Notes 6 and 7; its 2025 Form 10-K describes ongoing risk-management strategies and policies.

Controls and Procedures

As of September 30, 2026, management assessed disclosure controls and procedures as effective. In Q3 2026, MDLZ completed the first phase of its ERP implementation in North America and Latin America. The implementation required updates to internal controls to reflect changes in business processes and accounting procedures. Testing and review took place before and after implementation, with post-implementation monitoring to continue. Management does not believe the ERP implementation adversely affected internal control over financial reporting; it was the quarter’s only material change in internal controls.

No material changes were reported to the risk factors disclosed in Mondelez International’s Form 10-K for the year ended December 31, 2025.

Insider Trading Plan

On September 10, 2026, Gustavo Valle, EVP and President, North America, adopted a Rule 10b5-1(c) trading plan. Subject to the plan’s conditions, through August 31, 2027, it permits the potential exercise of vested options and sale of up to 69,520 shares, plus the sale of up to 15,000 shares of common stock. These are authorized maximums, not reported completed transactions.