By Granth Vanaik
(Reuters) -Mondelez International Inc on Thursday raised its annual forecasts on steady demand for its chocolates and biscuits despite price hikes.
Packaged food makers have been raising prices to protect profit margins from higher costs, but have seen little opposition from inflation-hit consumers who continue to prefer chocolates and snacks over private-label alternatives.
Revenue from Mondelez (NASDAQ:MDLZ)'s emerging markets surged 21.4% while it jumped 16% in developed markets.
"Consumers are accepting the higher prices, as seen by the healthy increase in sales volumes," said Edward Jones analyst Brittany Quatrochi.
Gross margin, however, remained under pressure and fell 80 basis points to 37.6% amid rising costs and push back by retailers and customers in Europe against a price hike in January.
Mondelez said the disruption was "more benign than anticipated" but finance chief Luca Zaramella warned it could "potentially affect the second quarter".
"We're only 80% done with the price increases, and we still have some negotiations going on," CEO Dirk Van de Put said.
The company now expects 2023 organic net revenue to rise more than 10%, compared to a prior forecast of 5% to 7% growth.
The Oreo maker also expect annual profit to grow more than 10% on a constant currency basis, compared to its earlier view of high-single digit growth.
On an adjusted basis, Mondelez earned 89 cents per share, compared with estimates of 80 cents, according to Refinitiv data.
Peer Hershey Co (NYSE:HSY) had also said it expects annual revenue and profit at the upper end of its previous forecast, benefiting from higher prices and resilient demand.