Mondelēz International Inc. (NASDAQ:MDLZ)

The analysis of the return on equity (ROE) over the observed period reveals a cyclical pattern characterized by significant volatility. ROE experienced a notable decline throughout 2022, reaching a low of 10.11% by December 31, followed by a robust recovery in 2023, peaking at 17.50% at year-end. A similar cycle of fluctuation occurred in 2024, with a year-end peak of 17.12%, before a sustained contraction throughout 2025, where ROE dropped to 9.49% by December 31. A slight recovery to 10.13% is noted as of March 31, 2026.

Return on Assets (ROA)

Asset productivity serves as the primary driver of volatility in the overall equity returns. ROA exhibited a downward trend in 2022, falling from 6.17% to 3.82%. This was reversed in 2023, where a consistent quarterly increase led to a peak of 6.95% by December 31. The 2024 period showed relative stability with an end-of-year spike to 6.73%, followed by a significant and steady erosion of asset returns throughout 2025, bottoming out at 3.43% in December. The trend indicates that the company's ability to generate profit from its total asset base has been inconsistent, mirroring the movement of the ROE.

Financial Leverage

The financial leverage ratio remained relatively stable throughout the period, though a gradual upward trajectory is observable. Starting at 2.41 in March 2022, the ratio generally trended higher, reaching a peak of 2.77 by September 30, 2025, and ending at 2.76 in March 2026. This indicates a steady increase in the use of debt relative to equity to finance assets.

Two-Component ROE Integration

The disaggregation of ROE demonstrates that the fluctuations in shareholder returns are almost entirely attributable to changes in ROA rather than shifts in capital structure. While financial leverage increased over the long term, this multiplier effect was insufficient to offset the sharp declines in ROA observed at the end of 2022 and throughout 2025. Consequently, the deterioration in asset efficiency directly translated into diminished equity returns, despite the modestly higher leverage providing a slight buffer to the downside.

The Return on Equity (ROE) exhibits a cyclical pattern over the analyzed period, characterized by an initial decline in 2022, a strong recovery peaking at 17.50% in December 2023, and a subsequent contraction reaching a low of 9.49% by December 2025. The volatility in ROE is primarily driven by fluctuations in profit margins, as operational efficiency and financial leverage demonstrated more consistent upward trends.

Net Profit Margin

Profitability margins demonstrate significant volatility. After an initial decline from 14.34% in March 2022 to a trough of 8.63% in December 2022, margins recovered steadily to peak at 13.77% in December 2023. However, a downward trend emerged throughout 2024 and 2025, culminating in a sharp compression to 6.36% by December 2025, before a slight recovery to 6.64% in March 2026. This margin erosion serves as the primary detractor for overall equity returns in the latter half of the period.

Asset Turnover

A consistent and positive trajectory is observed in asset utilization. The ratio improved steadily from 0.43 in March 2022 to 0.55 by March 2026. This gradual increase indicates a sustained improvement in the efficiency with which assets are employed to generate revenue, providing a stabilizing effect on ROE despite the volatility in net margins.

Financial Leverage

The financial leverage ratio shows a general expansion over the timeframe, rising from 2.41 in March 2022 to 2.76 by March 2026. While there were periodic fluctuations, the trend indicates an increased reliance on debt or a reduction in the equity base relative to total assets. This increase in leverage acted as a multiplier that partially offset the decline in net profit margins during the final quarters of the analysis.

In summary, the DuPont disaggregation reveals that the overall return on equity is the result of competing forces. The gains achieved through improved asset turnover and increased financial leverage were insufficient to fully counteract the significant compression in net profit margins observed between 2024 and 2026, leading to a diminished ROE in the final phase of the period.

The Return on Assets (ROA) exhibits significant volatility over the analyzed period, characterized by a cyclical pattern of decline and recovery followed by a pronounced downturn in the final quarters.

Net Profit Margin

Profitability margins showed substantial fluctuation, beginning at 14.34% in March 2022 before declining to a period low of 8.63% by December 2022. A period of recovery followed, with margins peaking at 13.77% in December 2023. However, a sustained downward trend emerged throughout 2025, with the margin contracting sharply to 6.36% by December 2025 and concluding at 6.64% in March 2026.

Asset Turnover

Asset utilization demonstrates a consistent and gradual upward trajectory. Starting at 0.43 in March 2022, the ratio improved steadily over the period, reaching its peak of 0.55 by March 2026. This indicates a persistent increase in the efficiency with which assets are utilized to generate revenue.

ROA Disaggregation and Driver Analysis

The movement in ROA is predominantly driven by the Net Profit Margin, as the Asset Turnover remained relatively stable with a slight positive slope. While the improvement in asset efficiency provided a marginal cushion, it was insufficient to offset the severe compression in profitability observed in late 2025. As a result, the ROA peaked at 6.95% in December 2023 before falling to 3.43% in December 2025, mirroring the volatility of the profit margin component.