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- The maker of Oreo and Cadbury Dairy Milk prepared for the worst ahead of the UK’s scheduled departure from the European Union in March.
- Ahead of the new Brexit deadline, Mondelez plans to stockpile raw ingredients, lease extra warehouse space, and contract more delivery trucks for the second time this year.
- While the confectioner is confident it can ride out supply-chain disruptions, it fears Brexit could devalue the British pound, spark inflation, and weaken consumer confidence.
- Watch Mondelez trade live.
The maker of Oreo and Cadbury Dairy Milk prepared for the worst ahead of the UK’s scheduled departure from the European Union in March. Now that Brexit has been delayed until October, Mondelez plans to repeat its preparations for a second time this year.
The UK division of Mondelez is a "snacking powerhouse" that commands a large share of the chocolate, biscuit, and candy markets, CEO Dirk Van de Put said on the earnings call this week. Strong Easter sales in the UK helped drive the confectionery giant’s net revenues in Europe up 3.9% to $2.25 billion in the second quarter.
Given the territory’s importance, Mondelez has worked to minimize any Brexit-related disruptions. It stocked up on raw materials such as cocoa and sugar, leased additional warehouse space, and contracted more delivery trucks before the original Brexit deadline. Ahead of the new departure date, it plans to do so again.
"We are going to put the plan back in motion," Van de Put said on the call. If worst comes to worst, Mondelez’s UK production facilities should be capable of satisfying Brits’ snacking needs, he added.
While Mondelez is confident it can ride out any supply-chain disruptions caused by Brexit, there are other risks it can’t control.
"There will be most likely an immediate currency devaluation on top of what we have seen these last couple of days," finance chief Luca Zaramella said on the call. "We will also see potentially inflation running up," he continued, which "might hamper consumer confidence."
"That might be detrimental not only to our business but to the overall economy," Zaramella added.
The delay to Brexit has been costly and disruptive for numerous UK companies. For example, car companies scheduled their annual halt in production to coincide with the original Brexit timeline, removing that option from the table in October.
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