Mondelez International Inc – Risk Profile
- As per GlobalData's proprietary risk methodology, Mondelez's overall risk score is 3.15, signifying medium risk
- Country and operational pillars influenced by global multi-brand operations, have boosted the overall risk profile of the company
- Low liquidity and over-reliance on equity have negatively impacted the financial risk scores
Mondelez International Inc (Mondelez) has a satisfactory risk profile and is one of the leading companies based on our proprietary risk assessment of the food sector in the consumer industry. The company's operational score fares better than the sector average due to an efficient manufacturing network, strong R&D capabilities, and robust distribution network. However, low liquidity is a cause for concern, affecting the financial risk scores.
About the Company
Mondelez manufactures and markets food products and beverages. The company's product portfolio comprises snacks, including cookies, crackers, salted snacks, chocolate, gum and candy, cheese and grocery products, and powdered beverage products. It markets products under Barni, belVita, Chips Ahoy, Club Social, Enjoys Life Foods, Cadbury Dairy Milk, 5 Star, Clorets, Halls, Maynards Bassetts, Sour Patch Kids, Stride, Trident, Philadelphia, Bournvita, and Tang brand names.
Mondelez is one of the leaders in the food industry, with a market cap of $91 billion. It reported revenue of $28.7 billion in 2021, a growth of 8.05% from 2020. Net income increased by 20.96% in 2021compared to 2020.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Mondelez's overall risk score is at par with the sector's overall score. Companies like Dali Foods Group Co Ltd, Calbee Inc, and Foshan Haitian Flavoring Food Co., Ltd. are the leaders in the sector.
Country Risk:
Mondelez has a country risk score of 3.79. The company has a presence in diverse territories, insulating it from the risk associated with economic and political factors of a specific region. The majority of its revenue is from Europe (38.39%), followed by North America (30.68%), MEA and Asia (21.59%), and Latin America (9.31%).
Industry Risk:
The company's primary exposure is from the food sector; all its revenue comes from the food business. A moderate industry risk score of 3 reflects lower profit margins and weak growth projections for the food sector compared to other sectors.
Operational Risk:
The scale of the company primarily drives a strong operational score for Mondelez. The company has more than 386 brands under its umbrella, operates in over 80 countries, and markets its products in over 150 countries. Improvement in the segment's performance led to growth in revenue, which enhanced the company's ability to provide higher returns to its shareholders and increased its ability to allocate adequate funds for growth initiatives. However, negative operating leverage could be a cause for concern.
Financial Risk:
The company's financial risk score of 2.04 is less than the industry average. The low current ratio and quick ratio impacted the liquidity scores. It indicates the decreasing ease in funding the company's day-to-day operations, limiting its ability to capture growth opportunities in the market. The company is also over-relying on its equity, given its low debt-to-equity ratio, which can be costly and inefficient. The same has also impacted the financial risk scores.
About our Methodology:
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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