Mondelez 2014 Annual Report Download - page 25

Table of Contents
2014-2018 Restructuring Program
On May 6, 2014, our Board of Directors approved a $3.5 billion restructuring program, comprised of approximately $2.5 billion in
cash costs and $1 billion in non-cash costs (the “2014-2018 Restructuring Program”), and up to $2.2 billion of capital expenditures.
The primary objective of the 2014-2018 Restructuring Program is to reduce our operating cost structure in both our supply chain
and overhead costs. We expect the 2014-2018 Restructuring Program to generate annualized savings of at least $1.5 billion by the
program’s completion at the end of 2018. Lower overheads and accelerated supply chain cost reductions are each expected to
generate roughly half of the total incremental savings. We expect to incur the majority of the program’s charges in 2015 and 2016
and to complete the program by year-end 2018. In 2014, we recorded restructuring and related implementation charges of $381
million under this program. For additional information on the 2014-2018 Restructuring Program, see Note 6, Restructuring
Programs .
S ummary of Results
Fi nancial Outlook
We seek to achieve top-tier financial performance. We manage our business to achieve this goal using a number of operating
metrics including Organic Net Revenue, Adjusted Operating Income and Adjusted EPS. (Refer to Non-GAAP Financial Measures
appearing later in this section for more information on these measures.) Additional metrics that we use or monitor include product
quality measures, category growth, market share performance, pricing net of commodity costs, net commodity inflation, volume
growth, Power Brand Organic Net Revenue growth, gross and net productivity savings, brand support and related investments,
capital spending, cash conversion cycle, free cash flow, return on invested capital and shareholder returns. We also monitor a
number of factors and trends that we expect may impact our near- and long-term revenues and profitability objectives:
Long-Term Demographics and Consumer Trends –
Snack food consumption is highly correlated to GDP growth, urbanization of the
population and rising discretionary income levels associated with a growing middle class particularly in emerging markets. Over the
long-term, we expect these trends to continue leading to growth in key consumer behaviors, including increased snacking
occasions, greater use of convenience food and migration to more frequent, smaller meals. In the near term, lower GDP growth,
high unemployment and weak consumer confidence in Europe and emerging markets has slowed category and our growth.
Demand – We monitor consumer spending and our market share within the food and beverage categories in which we sell our
products. Growth in the global categories slowed from approximately 4% in 2013 to 3.6% in 2014. We believe the slowdown in
category growth will continue to affect our near-term net revenue growth, but we expect the slowdown, particularly in emerging
markets, to be temporary. We expect category growth to return to levels more in line with the expected growth of emerging markets
and consumer spending in those markets. We continue to make investments in our brands and build strong routes to market to
address the needs of consumers in emerging and developed markets. In doing so, we anticipate stimulating demand in our
categories and growing our position in these markets.
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• Net revenues decreased 3.0% to $34.2 billion in 2014 and increased 0.8% to $35.3 billion in 2013. Net revenues in 2014
were significantly affected by unfavorable currency translation as the U.S. dollar strengthened against most currencies in
which we operate.
• Organic Net Revenue increased 2.4% to $36.0 billion in 2014 and increased 3.9% to $35.9 billion in 2013. Organic Net Revenue is a non-GAAP financial measure we use to evaluate our underlying results (see the definition of Organic Net
Revenue and our reconciliation with net revenues within
Non
-
GAAP Financial Measures
appearing later in this section).
• Diluted EPS attributable to Mondelēz International decreased 41.6% to $1.28 in 2014 and increased 28.1% to $2.19 in
2013. Excluding the results of discontinued operations, our diluted EPS attributable to Mondelēz International from
continuing operations decreased 0.8% to $1.28 in 2014 and increased 46.6% to $1.29 in 2013. A number of significant
items also affected the comparability of our reported results, as further described in the Discussion and Analysis of
Historical Results
appearing later in this section and in the notes to the consolidated financial statements.
• Adjusted EPS increased 14.3% to $1.76 in 2014 and increased 7.7% to $1.54 in 2013. On a constant currency basis,
Adjusted EPS increased 23.4% to $1.90 in 2014 and increased 11.9% to $1.60 in 2013. Adjusted EPS is a non-GAAP
financial measure we use to evaluate our underlying results (see the definition of Adjusted EPS and our reconciliation
with diluted EPS within
Non
-
GAAP Financial Measures
appearing later in this section).