ShinesRooms Coverage on Mondelez and Hershey: Emerging Economies Driving Growth for Confectioners

NEW YORK, NY -- (Marketwire) -- 02/05/13 -- The global confectionary market has been driven by emerging markets in recent years. In the developed markets, confectioners have been offering products that deliver functional benefits for health and well being. For companies such as Mondelez and Hershey Company, the key growth driver will be emerging markets. Over the past decade, rise in disposable income in emerging markets has boosted demand for confectionary products. This trend is likely to continue as emerging markets are forecast to continue to grow at a robust pace. The growing middle-class in these markets will be the key driver of growth for global confectionary market.

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In the more matured developed markets, there has been an increase in demand for healthier confectionery products. Going forward, growth in these markets will be driven by increasing demand for healthier products. A major concern for confectioners in recent years has been rising input costs due to volatility in the commodity markets. The trend is likely to continue this year as well and put pressure on margins.

Back in November, Mondelez, formerly known as Kraft Foods Inc., reported its financial results for the third quarter. Despite the tough economic environment, the company delivered solid results in Europe, mainly due to volume/mix gains and continued benefits from a focus on productivity and overhead reduction. The company's organic net revenue in the region rose 0.7%. Operating income for the region fell 0.8% due to an unfavorable impact of foreign exchange.

In North America, Mondelez delivered robust top-line and bottom-line growth due to strong U.S. biscuit performance. The company's net revenue in the third quarter in North America rose 1.9%, while organic net revenue rose 2.2%. Surprisingly, Mondelez's performance was the weakest in developing markets in the third quarter. The company delivered modest organic growth in these markets. However, this was mainly due to difficult comparison to the prior year quarter and some execution issues. The company saw robust growth in China, India and the Middle-East. However, this was offset by disappointing results in Brazil and Russia.

David Brearton, CFO of Mondelez, said in November that the company remains confident in the 2013 guidance. The company reaffirmed its 2013 Organic Net Revenue growth outlook to be at the low end of its long-term growth target of 5% to 7%.

Mondelez will report its fourth quarter results on February 13, 2013.

Back in October, Hershey gave a cautious outlook for 2013. CEO John P. Bilbrey said that the company expects economic environment for retailers and consumers to remain challenging in 2013. However, Bilbrey believes that the investments the company has made have resulted in a business model that is more efficient and effective, which will enable the company to deliver predictable, consistent and achievable marketplace and financial performance.

Hershey released its quarterly results last week with revenue surging by 11.67% to 1.75 billion and net income up 5.54% to $160 million as compared to last year's figures. In-line with what he stated in the last reported quarter in 2012, John P. Bilbrey declared recently that the Hershey's fourth quarter financial and marketplace results represent a strong finish to 2012 and validate the company's strategy of focusing investments in the U.S. and key international geographies.

The company generates a huge portion of its business within the U.S. and the present quarter saw demand jumped domestically. However, the company has also been opening itself to broader markets as it is investing in international markets such as Mexico, South America and Asia.

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