On a mostly positive day for Mondelez International shareholders, there was a smidge of bad news: The ongoing negotiations with the bakers union will mean short-term costs for the company, Mondelez executives said Wednesday.
Meanwhile, the union warned of longer-term financial impact as it pushes a national boycott of Mondelez products made in Mexico.
On an earnings call with analysts Wednesday, Mondelez Chief Financial Officer Brian Gladden said the Deerfield-based company — owner of the Nabisco plant on Chicago’s Southwest Side — expects to incur “one-time costs” related to ongoing negotiations with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. Asked by an analyst whether there might be a “disruption” to the company’s North American business, Gladden said the company was prepared for that scenario.
Mondelez presented its “last, best and final offer” to the union earlier this month; the two sides haven’t met since April 8.
“It’s hard to predict where that goes,” Gladden said on the call Wednesday.
Since February, Mondelez has been in on-again-off-again labor talks with the bakers union. For almost two months, workers at the Chicago plant, as well as union members at six other facilities, have been working without a local contract.
Those contentious contract talks have been set against the backdrop of ongoing layoffs at the Chicago plant as Mondelez shifts some operations, including the production of Oreo cookies, to a newer plant in Salinas, Mexico. Last summer, Mondelez executives said up to 600 of the 1,200 Chicago workers would be laid off.
So far, at least 368 workers at the Chicago plant have been either laid off or given notice — and more cuts are expected.
Mondelez executives have stressed that the negotiations are separate and unrelated to the layoffs, which are associated with moving the production lines in order to cut costs and simplify the supply chain. Meanwhile, the union has said all along that the two issues are intertwined.
On Wednesday, union spokesman Ron Baker said the bakers union is working to rally other unions, nonprofits, churches and schools to the boycott of Mexican-made Mondelez products.
“They must be predicting a one-time cost stretched out over infinity,” Baker said. “We’re not backing off of any of this.
“If they want to send jobs out of the country, they’ll have to deal with Americans rejecting products that come back across that border.”
In regards to the company’s last contact offer, Baker said the union’s still weighing its options. He declined to comment on the possibility of a strike.
Overall, Wednesday was a good day for Mondelez. Executives boasted of strong first-quarter results, which saw the company beating analyst projections on revenues and profits. The company continues to expand its profit margins while cutting costs.
In the three-month period ending March 31, Mondelez earned $554 million — a 71 percent increase over $324 million during the same period a year ago — or $0.35 35 cents per share.
Net revenue of $6.4 billion was down 16.8 percent from $7.7 billion the same period a year ago. But organic net revenue, which excludes some items, rose 2.1 percent.
Mondelez shares climbed 3 percent to $43.88 in Wednesday trading.
gtrotter@tribpub.com
Twitter @GregTrotterTrib
