(Reuters) -Mondelez International Inc warned on Tuesday of a price hike to combat higher raw material costs, after posting strong quarterly results as customers munched more of their favorite snacks to beat boredom during coronavirus lockdowns.
Prices of commodities, including sugar, wheat and soy, are surging as consumers cook more at home during the COVID-19 crisis, forcing food companies to absorb higher costs..
The price hike will be implemented gradually and incremental inflation will be manageable as most raw materials are hedged for 2021, Chief Financial Officer Luca Zaramella said on an earnings call.
Shares of the Oreo cookie maker were 3.8% higher in extended trading.
The Chicago-based company has sharpened its focus on low-calorie and low-sugar products by adding brands such as vegan chocolate-maker Hu and protein bar firm Grenade to its portfolio, in a move to tap rising demand for healthier options.
It has also seen a surge in sales of its chocolates and snacks in markets including the United Kingdom, Germany and India, as consumers staying at home due to restrictions sought comfort in familiar brands.
Net revenue from its Asia, Middle East & Africa business rose 16.2% to $1.75 billion, while the European market revenue grew 10.2% to $2.85 billion.
Total revenue rose 7.9% to $7.24 billion, beating a Refinitiv IBES estimate of $7.02 billion, as it also benefited from strong demand during the festive Chinese New Year and Easter periods.
Excluding items, it earned 77 cents per share, 8 cents more than expectations.
(Reporting by Mehr Bedi and Aditi Sebastian in Bengaluru; Editing by Devika Syamnath, Arun Koyyur and Aditya Soni)