Mondelēz International Inc. (NASDAQ:MDLZ)

An analysis of the economic value added indicates significant volatility in the ability to generate returns exceeding the cost of capital between 2021 and 2025. The economic profit exhibits a cyclical pattern, transitioning from value destruction to marginal value creation and returning to a substantial deficit.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates substantial instability over the analyzed period. A notable decline occurred in 2022, falling to 3,016 million US$, followed by a peak of 5,433 million US$ in 2023. However, a sharp contraction is observed by 2025, where NOPAT fell to 2,920 million US$, representing the lowest value in the five-year sequence.

Capital Structure and Cost of Capital

Invested capital remained relatively constant, fluctuating within a narrow range between 60,269 million US$ and 63,833 million US$. Concurrently, the cost of capital showed minimal variance, peaking at 8.57% in 2023 and ending at 8.16% in 2025. This stability suggests that the volatility in economic profit is primarily driven by operational performance rather than changes in capital allocation or financing costs.

Economic Profit Trajectory

The economic profit was negative for the majority of the period. A significant deficit of -2,269 million US$ was recorded in 2022, which improved to positive values of 165 million US$ in 2023 and 248 million US$ in 2024. This brief period of value creation was reversed in 2025, with economic profit falling to -2,102 million US$, indicating a return to a state where operating returns are insufficient to cover the cost of invested capital.

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 financial performance regarding economic value creation exhibits significant volatility over the analyzed period, characterized by alternating phases of value destruction and marginal value creation.

Economic Profit Trends

Economic profit demonstrated substantial fluctuations, beginning at -337 million USD in 2021 and deteriorating sharply to -2,269 million USD in 2022. A recovery phase was observed between 2023 and 2024, during which economic profit turned positive, reaching 165 million USD and 248 million USD, respectively. This upward trajectory reversed abruptly by 2025, with economic profit declining to -2,102 million USD.

Invested Capital Stability

Invested capital remained relatively stable, fluctuating within a narrow range between 60,269 million USD and 63,833 million USD. The capital base peaked in 2022 before experiencing a slight contraction and stabilizing at 61,526 million USD by 2025. The lack of significant variance in invested capital indicates that the volatility in economic profit is primarily driven by changes in operational returns or the cost of capital rather than shifts in the scale of the investment base.

Economic Spread Ratio Analysis

The economic spread ratio closely tracks the movements of economic profit, reflecting the difference between the return on invested capital and the weighted average cost of capital. A significant negative spread of -3.55% was recorded in 2022, followed by a transition to positive values of 0.27% in 2023 and 0.41% in 2024. This positive spread indicates a period where the company generated returns in excess of its cost of capital. However, the ratio returned to a negative position of -3.42% in 2025, suggesting a return to value destruction.

The financial performance regarding economic value creation exhibits significant volatility despite a consistent upward trajectory in top-line growth. While net revenues increased steadily from US$ 28,720 million in 2021 to US$ 38,537 million by 2025, this growth did not translate into stable economic profit.

Net Revenue Trends

A continuous growth pattern is observed in net revenues over the five-year period. The most substantial year-over-year increase occurred between 2022 and 2023, where revenues rose from US$ 31,496 million to US$ 36,016 million, representing a strong expansion in market scale.

Economic Profit Fluctuations

Economic profit demonstrates extreme instability. The period began with value destruction in 2021 and 2022, with the deficit widening sharply to -US$ 2,269 million in 2022. A recovery phase followed in 2023 and 2024, yielding positive economic profits of US$ 165 million and US$ 248 million, respectively. However, this trend reversed abruptly in 2025, with economic profit falling to -US$ 2,102 million.

Economic Profit Margin Analysis

The economic profit margin reflects the underlying volatility of value creation. The margin dropped to a period low of -7.20% in 2022 before shifting into positive territory in 2023 (0.46%) and 2024 (0.68%). The subsequent decline to -5.45% in 2025 indicates that the returns on capital fell significantly below the cost of capital, despite the continued increase in total revenues.

The divergence between increasing revenues and fluctuating economic profit suggests that the costs of capital or operating inefficiencies have periodically offset the gains from revenue growth. The transition from value creation in 2024 to significant value destruction in 2025 highlights a critical instability in maintaining an economic return that exceeds the required threshold.