Share price of Mondelez International, Inc. (MDLZ - Analyst Report) shot up more than 5% in pre-market trading as the snacking giant delivered better-than-expected third-quarter profits and higher organic revenues.

Moreover, the maker of Oreo Cookies and Cadbury chocolates raised the full-year profit outlook following three consecutive quarters of double-digit earnings growth.

Mondelez’s third-quarter adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate of 39 cents by 28%. Adjusted earnings increased 25% from the prior-year quarter driven by higher margins, improved organic growth, lower interest expenses and share count. Earnings grew 32.5% on a constant-currency basis.

Pricing gains, strong performance in emerging markets, higher sales of Power brands, cost cuts and productivity gains led to the solid earnings in the quarter.

Adjusted earnings excluded restructuring costs, re-measurement of net monetary assets in Venezuela and other special items. Including these items, quarterly earnings declined 5.4% to 53 cents.

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Revenues Still Soft

Net revenue in the quarter decreased 1.6% year over year to $8.34 billion, missing the Zacks Consensus Estimate of $8.41 billion by almost 1% due to weak volumes. Currency headwinds hurt the quarter’s revenues by 4 percentage points as 80% of Mondelez’s sales are generated outside the U.S.

Organic revenues (excluding impact from acquisitions, divestures and foreign exchange) increased 2.7%, better than 1.2% in the last quarter driven entirely by pricing gains. Pricing increased 5.8% in the quarter as management increased the prices of most of its products over the course of the year to cover higher commodity costs.

Volume mix declined 3.1% in the quarter due to volume erosion in response to the significant pricing actions and increased competitive pressures. Mondelez claimed that competitors were slow in increasing prices which hurt volumes in the quarter. In addition, pricing related disputes with retailer customers, mainly in France, hurt the volume growth.

Revenues from the emerging markets were up 9%, much higher than 4.7% in the previous quarter. While Russia, India and Brazil continued to do well, revenues improved in China helped by easy comparisons, innovation and marketing support.

On the other hand, revenues in the developed markets declined 1.3% as growth in North America was offset by weak sales in Europe, mainly France.

Mondelez’s Power Brands grew 5.1% in the quarter, much better than 1.3% growth witnessed in the last quarter.

Margins Shoot Up

Though sales of food companies like Mondelez, Kellogg Co. (K - Analyst Report) and General Mills, Inc. (GIS - Analyst Report) have been slower amid a difficult retail environment, Mondelez has been focusing on expanding margins through cost savings and productivity improvement.

Adjusted gross margins improved 40 basis points (bps) year over year and 80 bps sequentially to 37.7% driven by pricing gains and supply chain savings which offset commodity cost inflation. Input costs have begun to rise sharply in 2014, especially dairy and cocoa requiring management to take significant pricing action.

Adjusted operating income increased 16.5% year over year to almost $1.14 billion on a constant-currency basis. Adjusted operating margin increased 140 bps year over year and 100 bps sequentially to 13.6% in the quarter driven by strong gross margins, overhead reductions, productivity gains and lower as well as more efficient advertising spending. The company witnessed strong margins in Europe and North America.

While management maintained the 2014 organic top-line growth target, it raised the previously provided expectations for earnings per share and operating margins. Organic top line is still expected to grow in the range of 2–2.5%.

Constant currency adjusted operating income is expected to grow approximately 10%, higher than prior expectation of a high single-digit increase. Adjusted operating margin is expected to be approximately 13%, higher than prior expectation of a high 12% range for the full year, slightly better than the 2013 levels.

Constant currency adjusted earnings are expected in the range of $1.82–$1.87 per share in 2014, higher than prior expectation of $1.73 to $1.78. However, currency is now expected to hurt earnings per share by 15 cents, up from 9 cents expected earlier. Including currency headwinds, adjusted earnings per share are expected in the range of $1.67–$1.72, still higher than prior range of $1.64–$1.69.

Mondelez carries a Zacks Rank #4 (Sell). Previously known as Kraft Foods, Inc., Mondelez changed the name following the spin-off of its North American grocery business into a separate independent company, Kraft Foods Group, Inc. (KRFT - Analyst Report) in Oct 2012.