Mondelez International (NASDAQ:MDLZ) topped first-quarter earnings expectations, but a combination of soaring cocoa costs and lower margins led to cautious guidance.

The company posted adjusted earnings of $0.74 per share, ahead of the $0.66 analyst consensus. However, this marked an 18.3% decline year-over-year on a constant currency basis, highlighting the impact of mounting input cost pressures. Revenue came in at $9.31 billion—just shy of the $9.34 billion estimate—but rose 0.2% from the prior year. Organic net revenue increased 3.1%, fueled by price hikes that helped offset a 3.5% drop in volume and product mix.

The company reaffirmed its full-year 2025 outlook for approximately 5% organic net revenue growth but warned that adjusted EPS is expected to decline around 10% on a constant currency basis. Management attributed the drop to “unprecedented” cocoa inflation, which has significantly driven up raw material and production costs.

Gross profit margin fell sharply to 26.1%, down 2,500 basis points, hit by mark-to-market losses on commodity and currency derivatives along with rising transportation and input expenses.