Mondelez International Inc said on Thursday it expects to face a larger impact from supply chain snags in its key North American segment in the current quarter, as the chocolatier grapples with labor shortages and inflationary pressures.

Shares of the Chicago-based Oreo cookie maker were down about 2% after the bell, as the company’s gross margin declined to 37% in the fourth quarter from 39.4% a year earlier.

Packaged food makers have been struck by soaring shipping and labor expenses due to a strained supply chain, while surging demand for wheat, sugar and other commodities has driven up raw material costs, crimping margins across the sector.

Mondelez is also reeling from a six-week strike of about 1,000 workers at its U.S. plants that took place in August, which coupled with elevated demand and persistent supply chain issues depleted the Cadbury chocolate maker’s inventories.

“We have entered 2022 with low stocks, and we are working to rebuild inventory levels, which takes time in this environment,” Mondelez Chief Financial Officer Luca Zaramella said on a call.

The company had stocked up on inventories ahead of the strike, helping it offset a revenue hit in the third quarter.

“The effect of (the strike) may modestly linger, but should dissipate as the year progresses,” Edward Jones analyst John Boylan said.

The food giant said it expects cost inflation to increase in high single digits compared with 2021. It also warned of an 8-cent hit to its full-year adjusted earnings per share from foreign currency translation, adding it would decrease net revenue growth by about 2.5%.

Even as Mondelez took a hit to its margins, the price hikes and strong consumer demand boosted its revenue by 4.9% to $7.66 billion, above analysts’ estimate of $7.59 billion, according to Refinitiv IBES.

Excluding items, the Ritz crackers maker earned 72 cents per share in the quarter, in line with expectations.

It comes a week after the firm failed in its bid to buy the consumer health division of GlaxoSmithKline (GSK) for 50 billion pounds…

Data also showed, however, that some green shoots are visible in January, especially for staples, as consumers have been pantry-loading first in metros and now in smaller towns due to the third wave, with retailers increasing stock levels…