Mondelēz International Inc. (NASDAQ:MDLZ)

The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited volatility, beginning at US$4,733 million in 2021, declining substantially to US$3,016 million in 2022, then recovering to US$5,433 million in 2023, followed by a slight decrease to US$5,271 million in 2024, and a considerable drop to US$2,920 million in 2025. The cost of capital remained relatively stable, increasing from 8.18% in 2021 to 8.51% in 2023 before decreasing to 8.11% in 2025. Invested capital showed a modest increase between 2021 and 2022, a decrease in 2023 and 2024, and then a slight increase in 2025, remaining generally within the range of US$60 to US$64 billion.

Economic Profit Trend

Economic profit transitioned from a modest loss of US$-304 million in 2021 to a substantial loss of US$-2,235 million in 2022. A positive economic profit of US$199 million was achieved in 2023, which further improved to US$280 million in 2024. However, economic profit declined sharply in 2025, resulting in a loss of US$-2,070 million. This pattern suggests a sensitivity to changes in NOPAT and, to a lesser extent, the cost of capital.

Relationship between NOPAT and Economic Profit

The fluctuations in economic profit closely mirror those of NOPAT. The significant decline in NOPAT from 2021 to 2022 directly contributed to the larger economic loss in the same period. Conversely, the increase in NOPAT from 2022 to 2024 drove the positive economic profit observed in those years. The substantial decrease in NOPAT in 2025 resulted in a significant economic loss.

Cost of Capital Impact

The cost of capital experienced a gradual increase through 2023, which likely exerted downward pressure on economic profit during that period. The subsequent decrease in the cost of capital in 2024 and 2025 offered some offset, but was insufficient to prevent the economic loss in 2025 given the concurrent decline in NOPAT.

Invested Capital Stability

While invested capital fluctuated, it remained relatively stable overall. The changes in invested capital did not appear to be a primary driver of the observed economic profit trends, with NOPAT and the cost of capital exhibiting a more pronounced influence.

Net operating profit after taxes (NOPAT) exhibited fluctuations over the five-year period. While net earnings attributable to Mondelēz International demonstrated volatility, NOPAT generally tracked a similar pattern, though with differing magnitudes. An initial decline was followed by a period of growth, then a subsequent decrease.

Overall Trend

NOPAT began at US$4,733 million in 2021, decreased to US$3,016 million in 2022, then increased significantly to US$5,433 million in 2023. This upward momentum continued, albeit at a slower pace, reaching US$5,271 million in 2024 before declining to US$2,920 million in 2025.

Year-over-Year Changes

The largest year-over-year decrease occurred between 2021 and 2022, with NOPAT falling by US$1,717 million. Conversely, the most substantial increase was observed between 2022 and 2023, with NOPAT rising by US$2,417 million. A moderate decrease of US$162 million was noted between 2023 and 2024, followed by a more pronounced decline of US$2,351 million between 2024 and 2025.

Relationship to Net Earnings

In 2021, NOPAT exceeded net earnings by US$433 million. This difference narrowed in 2022, with NOPAT exceeding net earnings by only US$299 million. In 2023, NOPAT surpassed net earnings by US$474 million. The gap widened again in 2024 to US$660 million, but then contracted significantly in 2025, with NOPAT exceeding net earnings by only US$469 million. This suggests a changing relationship between operating profitability and overall net income.

The considerable decrease in NOPAT in 2025 warrants further investigation to determine the underlying factors contributing to this decline. The fluctuations observed throughout the period suggest sensitivity to external economic conditions or internal operational changes.

The provision for income taxes and cash operating taxes exhibited fluctuating behavior between 2021 and 2025. While both metrics moved in similar directions, notable differences in magnitude and specific year-over-year changes were observed.

Provision for Income Taxes

The provision for income taxes decreased from US$1,190 million in 2021 to US$865 million in 2022, representing a substantial decline. This was followed by a significant increase to US$1,537 million in 2023. A further, though smaller, increase occurred in 2024, reaching US$1,469 million, before decreasing considerably to US$782 million in 2025. The volatility suggests potential impacts from changes in tax regulations, geographic earnings mix, or the recognition of tax benefits.

Cash Operating Taxes

Cash operating taxes demonstrated a decrease from US$1,066 million in 2021 to US$1,003 million in 2022. A marked increase was then recorded in 2023, with cash operating taxes reaching US$1,697 million. This was followed by a decrease to US$1,328 million in 2024, and a further decline to US$900 million in 2025. The pattern mirrors that of the provision for income taxes, but the absolute values are consistently lower.

Relationship between Provision and Cash Taxes

In 2021 and 2022, the difference between the provision for income taxes and cash operating taxes was relatively small, approximately US$124 million and US$162 million respectively. However, this difference widened significantly in 2023 to US$160 million, decreased in 2024 to US$141 million, and then increased again in 2025 to US$182 million. This divergence suggests changes in the timing of tax payments relative to reported income, potentially due to deferred tax assets or liabilities, or differences in tax accounting versus cash accounting methods.

Overall Trend

Both measures experienced a peak in 2023, followed by a decline in 2024 and 2025. The 2025 values for both the provision for income taxes and cash operating taxes represent the lowest levels observed during the analyzed period. This suggests a potential reduction in taxable income or increased utilization of tax credits in the latter years.

The invested capital of the company exhibited relative stability over the five-year period, with fluctuations occurring between approximately US$60.3 billion and US$63.8 billion. A slight increase is observed from 2021 to 2022, followed by a decrease in 2023, and a further decrease in 2024. The final year, 2025, shows a modest increase, returning invested capital to levels similar to those seen in 2021.

Total Reported Debt & Leases

Total reported debt and leases increased significantly from 2021 to 2022, rising from US$20.1 billion to US$23.6 billion. This was followed by a substantial decrease in 2023 to US$20.1 billion, and a further reduction in 2024 to US$18.5 billion. A subsequent increase is noted in 2025, reaching US$21.968 billion. This indicates active debt management and potential shifts in financing strategies.

Total Shareholders’ Equity

Total shareholders’ equity experienced a decrease from 2021 to 2022, moving from US$28.3 billion to US$26.9 billion. It then increased in 2023 to US$28.3 billion, before decreasing again in 2024 to US$26.9 billion, and finally declining further in 2025 to US$25.8 billion. This suggests potential impacts from net income, dividends, and share repurchases on equity value.

Relationship between Debt, Equity, and Invested Capital

Invested capital is calculated as the sum of total debt and shareholders’ equity. The fluctuations in both debt and equity contribute to the observed stability in invested capital. While debt levels decreased in 2023 and 2024, equity also decreased, partially offsetting the impact on the overall invested capital figure. The increase in debt in 2025, coupled with a further decrease in equity, resulted in a modest increase in invested capital.

The observed patterns suggest a dynamic capital structure, with the company actively managing its debt and equity positions. Further investigation into the underlying drivers of these changes, such as profitability, investment activities, and financing decisions, would be necessary for a more comprehensive understanding.

The economic spread ratio exhibited significant fluctuations between 2021 and 2025. Initial values were negative, transitioning to positive figures before declining substantially again. This pattern correlates with the movement of economic profit, which also demonstrated considerable volatility over the same period.

Economic Spread Ratio

In 2021, the economic spread ratio was -0.49%, indicating that the company’s return on invested capital was less than its cost of capital. A substantial decrease was observed in 2022, with the ratio falling to -3.50%, signifying a widening gap between returns and costs. The ratio turned positive in 2023, reaching 0.32%, suggesting the company generated returns exceeding its cost of capital. This positive trend continued into 2024, with the ratio increasing to 0.47%. However, a sharp decline occurred in 2025, with the ratio plummeting to -3.36%, indicating a return to a situation where returns were significantly below the cost of capital.

The economic spread ratio’s movement closely mirrors that of economic profit. The negative economic profit values in 2021 and 2022 align with the negative economic spread ratios, and the positive economic profit in 2023 and 2024 corresponds with the positive spread ratios. The substantial negative economic profit reported in 2025 is consistent with the significantly negative economic spread ratio for that year.

Invested Capital

Invested capital remained relatively stable throughout the period, fluctuating between US$60.269 billion and US$63.833 billion. While there were some year-over-year changes, these were not substantial enough to appear as a primary driver of the observed changes in the economic spread ratio. The consistency in invested capital suggests that shifts in profitability, rather than capital allocation, were the dominant factor influencing the economic spread.

The volatility in the economic spread ratio suggests potential instability in the company’s ability to generate returns above its cost of capital. The significant decline in 2025 warrants further investigation to determine the underlying causes and potential mitigating strategies.

The economic profit margin exhibited significant fluctuations between 2021 and 2025. Initial observations reveal a period of negative economic profit, followed by a brief positive trend, and a subsequent return to negative economic profit.

Economic Profit Margin Trend

In 2021, the economic profit margin stood at -1.06%. This metric deteriorated substantially in 2022, reaching -7.10%. A positive shift occurred in 2023, with the margin increasing to 0.55%, and continuing to improve slightly in 2024 to 0.77%. However, the economic profit margin experienced a sharp decline in 2025, falling to -5.37%.

The economic profit itself mirrors this pattern. Negative economic profit was recorded in 2021 and 2022, transitioning to positive figures in 2023 and 2024 before becoming negative again in 2025. The magnitude of the negative economic profit in 2022 was considerably larger than in 2021 and 2025, indicating a particularly challenging year for value creation.

Relationship to Net Revenues

Net revenues demonstrated a consistent upward trend throughout the period, increasing from US$28,720 million in 2021 to US$38,537 million in 2025. Despite this revenue growth, the economic profit margin did not consistently benefit, suggesting that increases in costs or capital charges may have offset the gains from higher sales. The most pronounced divergence between revenue growth and economic profit margin occurred in 2025, where substantial revenue growth coincided with a significant decline in the margin.

The volatility in the economic profit margin suggests potential issues with cost management, capital efficiency, or the company’s ability to translate revenue growth into economic value. Further investigation into the underlying drivers of these fluctuations is warranted.