# How Mondelez makes money

CXProWealth Business Lens · Mondelez (MDLZ) · Q3 FY2026

Read from the 10-Q for the period 2026-07-01 to 2026-09-30, filed 2026-10-29 with the SEC (accession 0001628280-26-068256): https://www.sec.gov/Archives/edgar/data/1103982/000162828026068256/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $10.0B (+2.3% on the year)
- Operating income: $1.8B (operating margin 17.6%)
- Net income: $1.3B (net margin 13.1%)
- Gross margin: 39.4%
- Free cash flow: $991.0M (9.9% of revenue)
- Cash conversion (operating cash flow / net income): 0.98x
- Capital expenditure: 2.9% of revenue

## Where the money goes (Q3 FY2026)

- Biscuits & Baked Snacks → Net revenues: $4.9B
- Chocolate → Net revenues: $3.1B
- Gum & Candy → Net revenues: $1.2B
- Beverages → Net revenues: $208.0M
- Meals → Net revenues: $623.0M
- Net revenues → Cost of sales: $6.0B
- Net revenues → Gross profit: $3.9B
- Gross profit → Selling, general and administrative expenses: $2.0B
- Gross profit → Asset impairments and exit costs: $128.0M
- Gross profit → Amortization of intangible assets: $26.0M
- Gross profit → Operating income: $1.8B
- Operating income → Interest and other expense, net: $64.0M
- Operating income → Earnings before income taxes: $1.7B
- Benefit plan non-service income/(expense) → Earnings before income taxes: $27.0M
- Earnings before income taxes → Income tax provision: $424.0M
- Earnings before income taxes → Net earnings: $1.3B
- Equity method investment net earnings → Net earnings: $11.0M
- Net earnings → less: Noncontrolling interest earnings: $3.0M
- Net earnings → Net earnings attributable to Mondelēz International: $1.3B

## Where the revenue comes from

### Products and services (Segment Reporting - Net Revenues by Product Category (Details))

| Member | Value | Share |
|---|---:|---:|
| Biscuits & Baked Snacks | $4.9B | 49.1% |
| Chocolate | $3.1B | 31.0% |
| Gum & Candy | $1.2B | 11.6% |
| Meals | $623.0M | 6.3% |
| Beverages | $208.0M | 2.1% |

The members sum to total revenue.

### Segments (Segment Reporting - Operating Income by Segment (Details))

| Member | Value | Share |
|---|---:|---:|
| Europe | $3.6B | 35.6% |
| North America | $2.8B | 28.6% |
| Amea | $2.2B | 21.9% |
| Latin America | $1.4B | 13.9% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q3 FY2026 | Of revenue |
|---|---:|---:|
| Net revenues | $10.0B | 100% |
| Cost of sales | ($6.0B) | 60.6% |
| **Gross profit** | $3.9B | 39.4% |
| Selling, general and administrative expenses | ($2.0B) | 20.2% |
| Asset impairments and exit costs | ($128.0M) | 1.3% |
| Gain on divestiture | $0 | 0.0% |
| Amortization of intangible assets | ($26.0M) | 0.3% |
| **Operating income** | $1.8B | 17.6% |
| Benefit plan non-service income/(expense) | (-$27.0M) | 0.3% |
| Interest and other expense, net | -$64.0M | 0.6% |
| **Earnings before income taxes** | $1.7B | 17.3% |
| Income tax provision | ($424.0M) | 4.3% |
| Gain/(loss) on equity method investment transactions | $0 | 0.0% |
| Equity method investment net earnings | $11.0M | 0.1% |
| **Net earnings** | $1.3B | 13.1% |
| less: Noncontrolling interest earnings | ($3.0M) | 0.0% |
| **Net earnings attributable to Mondelēz International** | $1.3B | 13.1% |
| Basic earnings per share attributable to Mondelēz International (in dollars per share) | $1 | 0.0% |
| Diluted earnings per share attributable to Mondelēz International (in dollars per share) | $1 | 0.0% |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2007 | $35.9B | $4.2B | $2.7B | $3.6B | $1.2B | $2.3B |
| FY2008 | $40.5B | $3.6B | $2.9B | $4.1B | $1.4B | $2.8B |
| FY2009 | $38.8B | $5.2B | $3.0B | $5.1B | $1.3B | $3.8B |
| FY2010 | $31.5B | $2.5B | $4.1B | $3.7B | $1.7B | $2.1B |
| FY2011 | $35.8B | $3.5B | $3.6B | $4.5B | $1.8B | $2.7B |
| FY2012 | $35.0B | $3.6B | $3.1B | $3.9B | $1.6B | $2.3B |
| FY2013 | $35.3B | $4.0B | $3.9B | $6.4B | $1.6B | $4.8B |
| FY2014 | $34.2B | $3.2B | $2.2B | $3.6B | $1.6B | $1.9B |
| FY2015 | $29.6B | $8.9B | $7.3B | $3.7B | $1.5B | $2.2B |
| FY2016 | $25.9B | $2.6B | $1.6B | $2.8B | $1.2B | $1.6B |
| FY2017 | $25.9B | $3.5B | $2.8B | $2.6B | $1.0B | $1.6B |
| FY2018 | $25.9B | $3.3B | $3.3B | $3.9B | $1.1B | $2.9B |
| FY2019 | $25.9B | $3.8B | $3.9B | $4.0B | $925.0M | $3.0B |
| FY2020 | $26.6B | $3.9B | $3.6B | $4.0B | $863.0M | $3.1B |
| FY2021 | $28.7B | $4.7B | $4.3B | $4.1B | $965.0M | $3.2B |
| FY2022 | $31.5B | $3.5B | $2.7B | $3.9B | $906.0M | $3.0B |
| FY2023 | $36.0B | $5.5B | $5.0B | $4.7B | $1.1B | $3.6B |
| FY2024 | $36.4B | $6.3B | $4.6B | $4.9B | $1.4B | $3.5B |
| FY2025 | $38.5B | $3.5B | $2.5B | $4.5B | $1.3B | $3.2B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +5.8% (year before +1.2%): accelerating
- Operating income: -44.1% (year before +15.3%): slowing
- Net income: -46.8% (year before -7.0%): slowing
- Free cash flow: -8.2% (year before -2.2%): slowing

## Operating figures stated in the filing

- Volume/mix contribution to organic growth: 1.8 pp (as of 2026-09-30). "Vol/Mix 2.2 pp 1.5 pp 1.8 pp" (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Net pricing contribution to organic growth: 0.3 pp (as of 2026-09-30). "Pricing 1.9 (0.7) 0.3" (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- AMEA volume/mix contribution: 5.5 pp (as of 2026-09-30). "Net revenues increased $165 million (8.2%), due to favorable volume/mix (5.5 pp), higher net pricing (2.2 pp) and favorable currency translation rate changes (0.5 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- AMEA net pricing contribution: 2.2 pp (as of 2026-09-30). "Net revenues increased $165 million (8.2%), due to favorable volume/mix (5.5 pp), higher net pricing (2.2 pp) and favorable currency translation rate changes (0.5 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Latin America net pricing contribution: 6.1 pp (as of 2026-09-30). "Net revenues increased $149 million (12.0%), due to higher net pricing (6.1 pp), favorable impact of currency-related items (5.1 pp) and favorable volume/mix (0.8 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Latin America volume/mix contribution: 0.8 pp (as of 2026-09-30). "Net revenues increased $149 million (12.0%), due to higher net pricing (6.1 pp), favorable impact of currency-related items (5.1 pp) and favorable volume/mix (0.8 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Europe volume/mix contribution: 1.6 pp (as of 2026-09-30). "Net revenues decreased $122 million (3.3%), due to lower net pricing (3.7 pp) and unfavorable currency translation rate changes (1.2 pp), partially offset by favorable volume/mix (1.6 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Europe net pricing decline: 3.7 pp (as of 2026-09-30). "Net revenues decreased $122 million (3.3%), due to lower net pricing (3.7 pp) and unfavorable currency translation rate changes (1.2 pp), partially offset by favorable volume/mix (1.6 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- North America net pricing contribution: 1.6 pp (as of 2026-09-30). "Net revenues increased $31 million (1.1%), due to higher net pricing (1.6 pp), partially offset by lapping prior year net revenue from a divestiture (0.3 pp) and unfavorable currency translation rate changes (0.2 pp)." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Share of net revenue from Russia: 3.1% (as of 2026-09-30). "During the third quarter of 2026, Ukraine generated 0.3% and Russia generated 3.1% of our consolidated net revenue." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Share of net revenue from Ukraine: 0.3% (as of 2026-09-30). "During the third quarter of 2026, Ukraine generated 0.3% and Russia generated 3.1% of our consolidated net revenue." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.)
- Share of net revenue from Argentina: 1.3% (as of 2026-09-30). "As of September 30, 2026, our consolidated entities in Argentina, Türkiye, Egypt and Nigeria are operating in highly inflationary economies and represent 1.3 %, 0.6 %, 0.5 % and 0.3 %, respectively, of our consolidated net revenues for the three months ended September 30, 2026 and 1.4 %, 0.6 %, 0.5 % and 0.3 % of our consolidated net revenues for the nine months ended September 30, 2026." (Item 1. Financial Statements)

## Key insights

### Hedge marks, not snack sales, drove the profit jump

Operating income rose 136.3% on revenue up 2.3%, which the filing credits mainly to gains on commodity and currency hedges, a timing effect.

Cost of sales fell 15.3% to $6.04B while net revenues rose 2.3% to $9.97B. Gross margin reached 39.4% against 26.8% a year earlier, and operating margin 17.6% against 7.6%. The filing attributes the higher operating margin 'primarily' to 'a favorable year-over-year change in mark-to-market impacts from commodity and foreign currency derivatives': unrealized gains on contracts that hedge future ingredient purchases. _(from the filing)_
Management judges the regions on segment operating income, which leaves these hedge effects out. North America's segment profit equals 25.5% of reported operating income, AMEA's 21.2%, Europe's 19.3% and Latin America's 9.7%. The rest of the reported total sits outside the regions, mainly in the hedge gains, net of corporate costs and amortization. _(from the filing)_
Hedge gains are booked when the contracts are revalued and realized only as the hedged cocoa and other inputs pass through inventory, so they can swing the other way in a later quarter. Operating income went from $808M in Q1 FY2026 to $1.95B in Q2 FY2026 and $1.76B in Q3 FY2026, on net revenues that stayed between $9.36B and $10.08B. _(analysis)_
Net earnings attributable to Mondelez rose a smaller 75.6%, to $1.31B. The year-earlier quarter included a $169M gain on a former equity investment that did not recur, and the effective tax rate rose to 24.6% from 19.7%. _(from the filing)_

### Europe sells the most and earns the least per dollar

Europe brings in 35.6% of revenue but 19.3% of operating income, a 9.5% segment margin, as prices fall back after last year's increases.

Segment operating income as a share of segment revenue this quarter: AMEA 17.0%, North America 15.7%, Latin America 12.3% and Europe 9.5%. Europe's net revenues of $3.55B fell as net pricing subtracted 3.7 pp, which the filing ties to 'the lapping of input cost-driven pricing actions taken in the prior year'. Volume/mix added 1.6 pp. _(from the filing)_
The company says the elasticity from its earlier price increases 'adversely impacted consumer demand, particularly in Europe'. It also centres its new restructuring there: the actions to optimize the supply chain and cut overhead were 'primarily undertaken by our Europe segment', and the quarter's brand write-downs fell mostly on European biscuit brands. _(from the filing)_
Europe is where pricing met its limit. A region carrying more than a third of sales at the lowest margin of the four weighs on the whole group. Its profit recovery depends on volume holding up as prices ease, while the restructuring lowers its cost base. _(analysis)_

### AMEA earns more than Europe on 61% of its revenue

AMEA's $372M of segment profit tops Europe's $339M on $2.18B of revenue, with volume/mix adding 5.5 pp and pricing 2.2 pp.

AMEA's revenue grew on volume/mix of 5.5 pp, with volume growth 'in all categories except beverages', plus net pricing of 2.2 pp. Its segment operating income of $372M was 17.0% of its $2.18B revenue, the highest margin of the four regions, and 21.2% of reported operating income. _(from the filing)_
Part of this quarter's AMEA profit does not come from selling snacks. The filing lists 'a favorable year-over-year change in acquisition-related items' first among the reasons its segment profit rose, ahead of higher net pricing, productivity and volume/mix. _(from the filing)_
Latin America shows the other route to growth: net pricing of 6.1 pp against volume/mix of 0.8 pp, with pricing 'driven by input cost-driven pricing actions'. Its segment margin was 12.3%. _(from the filing)_
Growth from volume, as in AMEA, adds buyers and shelf space. Growth from price, as in Latin America, depends on consumers accepting it, and Europe's experience shows it can turn into lost volume once the increases stack up. _(analysis)_

### Cost relief is funding advertising, not just margin

Selling, general and administrative expenses rose 12.1%, over five times revenue growth of 2.3%, which the filing ties mainly to advertising and consumer promotion.

Selling, general and administrative expenses reached $2.01B, 20.2% of revenue, up 1.77 pp on a year earlier. Setting aside ERP, currency and other items, the filing says the increase 'was driven primarily by higher advertising and consumer promotion costs and higher other selling, general and administrative expenses'. _(from the filing)_
The filing names where the room came from: lower cocoa, dairy and sugar costs and manufacturing productivity, partly offset by higher packaging, nuts, edible oils, energy and grain costs. _(from the filing)_
In North America the spending has not yet shown up in volume. Net pricing added 1.6 pp to revenue while 'volume/mix was flat', and segment operating income of $448M fell, which the filing attributes first to 'higher advertising and consumer promotion costs' and higher raw material costs. _(from the filing)_
Spending lower input costs on brand support is a choice to buy volume rather than bank margin. Whether it pays will show in volume over the coming quarters, in North America above all. _(analysis)_

### Competitive edge

- **Biscuits, not chocolate, carry half of revenue** Biscuits & Baked Snacks brought in $4.89B, 49.1% of revenue, and grew 2.2%, while Chocolate, at 31.0% of revenue, grew 0.13%.
- **Earnings swing, but cash generation stays narrow** Free cash flow stayed between $2.85B and $3.60B a year from FY2018 to FY2025, while net income ranged from $2.45B to $4.96B.

### What to watch

- **Cocoa stays elevated, and pricing may not cover it** The filing expects cocoa to stay high by historical standards and warns that prices and hedges may not fully cover it.
- **Russia and tariffs put revenue at political risk** Russia generated 3.1% of net revenue this quarter, and the company expects new U.S. tariffs to hurt both revenue and cost of goods sold.
- **Some brand values sit close to their book value** Asset impairments and exit costs rose to $128M from $41M, and the filing names further brands whose fair value barely exceeds their carrying value.

## Operating income by segment

- North America: $448.0M (25.5% of operating income)
- Amea: $372.0M (21.2% of operating income)
- Europe: $339.0M (19.3% of operating income)
- Latin America: $170.0M (9.7% of operating income)

## Investor view

**Hedge gains marked to market, more than the snack business, drove most of Mondelez's 136.3% jump in operating income**

### How it makes money

Mondelez makes and sells snacks. The filing describes its core business as 'making and selling chocolate, biscuits and baked snacks'. Biscuits & Baked Snacks brought in $4.89B of the quarter's $9.97B in net revenues, 49.1% of the total, and Chocolate $3.09B, 31.0%. Gum & Candy at $1.15B, Meals at $623M and Beverages at $208M make up the rest. _(from the filing)_
The company runs those categories through four regions. Europe is the largest, with $3.55B of revenue or 35.6% of the total, followed by North America at $2.85B, AMEA at $2.18B and Latin America at $1.39B. Each regional management team, the filing says, has 'responsibility for the business, product categories and financial results in the regions'. _(from the filing)_
Of each revenue dollar this quarter, cost of sales took 60.6% and selling, general and administrative expenses 20.2%, leaving an operating margin of 17.6% and operating income of $1.76B. The regions reported segment operating income of $448M in North America, $372M in AMEA, $339M in Europe and $170M in Latin America. The remainder of the reported total sits outside the regions, mainly in gains on commodity and currency hedging contracts. _(from the filing)_
The business needs little capital to run. Capital spending was 2.9% of revenue this quarter. Operating cash flow of $1.28B was close to net earnings, a cash conversion ratio of 0.98, and free cash flow was $991M, or 9.9% of revenue. _(from the filing)_

### What shifted

Operating income rose to $1.76B from $744M a year earlier. The filing attributes the higher operating margin 'primarily' to 'a favorable year-over-year change in mark-to-market impacts from commodity and foreign currency derivatives': unrealized gains on hedges for future ingredient purchases, booked mostly in cost of sales. Cost of sales fell 15.3% while revenue grew 2.3%, which is why gross margin reads 39.4% against 26.8% a year earlier. _(from the filing)_
Underneath the hedges, input costs also eased. The filing names lower cocoa, dairy and sugar and manufacturing productivity as the drivers, with packaging, nuts, edible oils, energy and grains rising against them. Revenue growth came mainly from volume and mix, which added 1.8 pp to organic growth, while net pricing added 0.3 pp. _(from the filing)_
The regions moved apart. AMEA grew on volume/mix of 5.5 pp plus pricing of 2.2 pp. Latin America leaned on pricing of 6.1 pp, with volume/mix of 0.8 pp. In Europe, net pricing fell 3.7 pp as last year's cost-driven increases were lapped, partly offset by volume/mix of 1.6 pp. North America's pricing added 1.6 pp with volume flat, and its segment profit fell on higher advertising and raw material costs. _(from the filing)_
Spending grew faster than sales. Selling, general and administrative expenses rose 12.1% to $2.01B, or 20.2% of revenue, up 1.77 pp, which the filing ties mainly to 'higher advertising and consumer promotion costs'. Asset impairments and exit costs rose to $128M from $41M, covering restructuring centred on Europe and write-downs of biscuit brands in Europe and North America. _(from the filing)_
Net earnings attributable to Mondelez rose 75.6% to $1.31B, less than operating income, for two reasons. The year-earlier quarter included a $169M gain on a former equity investment that did not recur, and the effective tax rate rose to 24.6% from 19.7%. Diluted earnings per share were $1.02 against $0.57. _(from the filing)_

### Risks in the filing

The quarterly report states there were 'no material changes' to the risk factors in the last annual report, and it repeats the ones most active now. First is cocoa and other commodities: the company says it may not be able to raise prices enough to cover cocoa costs, its hedges may not protect it, and some inputs, such as dairy, can be hedged only in part. _(from the filing)_
Second is trade policy. Many products and significant inputs are imported across borders, and the company expects new U.S. tariffs to hurt both revenue and cost of goods sold, with significant effects if more are imposed. Goods moved under the U.S.-Mexico-Canada Agreement are mostly exempt for now, with no assurance that continues. _(from the filing)_
Third is war and conflict. Russia generated 3.1% and Ukraine 0.3% of net revenue this quarter. The company keeps operating in Russia but warns its assets there could be expropriated or impaired, or the business deconsolidated. Shipping disruption in the Middle East raises freight costs and transit times for some AMEA markets. _(from the filing)_
Fourth are currencies and brand values. Argentina, accounted for as a highly inflationary economy along with Türkiye, Egypt and Nigeria, made up 1.3% of net revenue. The company also names six brands whose fair value sits only slightly above their book value, and says one or more could be impaired if their sales and earnings forecasts weaken. _(from the filing)_
Two of these risks already show in the numbers. Pricing against cost shows in Europe, where lower prices cut revenue and the region earns the thinnest margin of the four. Brand value shows in the impairment line, which rose sharply from a year earlier on write-downs of biscuit brands in Europe and North America. _(analysis)_

## Founder view: mechanisms

### Hedging smooths costs, not reported profit

Mondelez buys cocoa, sugar, grains and other inputs ahead of need and locks prices with commodity and currency contracts. The cost it eventually pays is steadier than the market. But the contracts are revalued every quarter, and until the hedged ingredients are used, the gains and losses run through cost of sales. Reported profit therefore moves with commodity markets even when the business does not, which is why management judges the regions on segment profit that leaves these effects out. _(analysis)_

### Price to cover costs, and pay for it in volume

When cocoa and other inputs rose, Mondelez raised prices to protect its margin. Price passes cost through at once; the volume response arrives later and differs by market. The company says the elasticity from those increases hurt demand, particularly in Europe. A year on, Europe is lapping the increases with lower prices while volume returns, and Latin America is the region now pricing hardest. _(analysis)_

### One portfolio, four different regional economics

Mondelez sells the same categories in four regions, each run by its own team, with a mix of global and local brands. The same chocolate and biscuits earn different margins in each, depending on input costs, local competition, retailer power and how much advertising the market demands. Because management is measured on regional segment profit, the company works as four businesses sharing brands, recipes and purchasing. _(analysis)_

### Earnings swing, cash flow does not

Snacks cost little to make relative to their selling price, and the factories that make them last for decades. Mondelez spends a small share of revenue on equipment and turns most of its earnings into cash. Reported earnings move with hedges, pension settlements and one-off gains, but the cash the business produces has stayed in a much narrower range year after year, and that cash is what funds its dividend and share repurchases. _(analysis)_

## Member research

Signed-in members read, on the page: what Mondelez's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Mondelez 10-Q for the period to 2026-09-30: https://www.sec.gov/Archives/edgar/data/1103982/000162828026068256/ (2026-10-29)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02