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April 28, 2020, 11:15 p.m. EDT

Mondelez revenue rises as consumers stockpile food

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By Annie Gasparro

Mondelez International Inc. said the coronavirus pandemic is driving unprecedented demand for its snacks in North America, but higher costs and supply-chain disruptions weighed on the company's first-quarter earnings.

The maker of Oreo cookies, Triscuit crackers, Trident gum and other snacks said Tuesday that it has benefited from people staying home from work and school in the U.S. and Europe. At the same time, lockdowns in emerging markets including China that generate more than a third of Mondelez's revenue took a toll on its business in those countries.

"We had quite abrupt lockdowns that made sales and distribution more difficult," Chief Executive Dirk Van de Put told investors on a conference call. In some emerging markets, Mondelez struggled to run its factories because employees couldn't get to work, he said.

Mondelez is also spending more to provide larger orders for retailers during the pandemic. Like other food makers, the company has increased factory-worker wages and hired temporary workers to keep its operations humming.

"We also expect those cost headwinds to continue," Mr. Van de Put said.

The company's shares inched down 0.8% to $50.75 in after-hours trading.

In the first quarter, the higher costs squeezed Mondelez's adjusted gross margin -- a key measure of profitability that analysts had expected to improve.

The company pulled its financial forecast for the year and stopped its share buybacks in March.

Last week, Hershey Co. reported lower-than-expected sales amid weak demand in China and retreated from its annual guidance. Unilever SA also said sales were hit by lockdowns in China and India.

Mr. Van de Put said business in China is returning to normal now, and he expects emerging markets to overall bounce back in June.

Food producers have rushed to keep up with a surge in demand across many markets as shoppers adjust to social-distancing measures that have closed restaurant dining rooms and prompted more eating at home.

Mondelez said its total revenue rose 2.6% to $6.71 billion for the first quarter, topping analysts' prediction of $6.62 billion. Excluding currency fluctuations, mergers and asset sales, comparable global sales were up 6.4% from the prior year, including a 13% jump in North America.

Mondelez executives said they are looking for ways to reduce spending and adjust marketing and innovation plans as they prepare for a recession. Mr. Van de Put said this environment could also generate some acquisition opportunities.

He said that when the pandemic ends, he expects Mondelez to gain market share, especially in cookies, which have been top sellers in recent weeks.

"Consumers are looking for that moment of comfort," Mr. Van de Put said.

Mondelez said its profit fell nearly 18% to $753 million, or 52 cents a share, for the first quarter. On an adjusted basis, earnings of 69 cents a share topped analysts' expectation by 3 cents, according to Factset.

--Micah Maidenberg contributed to this article.

Write to Annie Gasparro at annie.gasparro@wsj.com

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