Kraft profits up amid price hikes
Kraft Foods has said that the growing popularity of its cookies and chocolates in developing markets - and the higher prices it has charged around the world - helped its profit edge up in the first quarter.
The parent company of Nabisco, Velveeta, Miracle Whip and other brands says it earned 813 million US dollars (£618 million), or 46 cents per share, in the first three months of the year. That is up 1.8% from 799 million US dollars (£607 million), or 45 cents per share, a year earlier.
Excluding one-time items such as restructuring costs, the company earned 57 cents per share. That was a penny more than analysts expected, according to FactSet.
Its net revenue for the quarter rose 4% to 13.1 billion US dollars (£9.9 billion), from 12.57 billion US dollars (£9.5 billion) a year ago. Organic revenue, which excludes the impact of currency fluctuations and divestitures, rose 6.5%, of that increase, 5.5% came from higher prices and 1% from improved volume and mix of products.
Rising costs for ingredients dragged down Kraft's gross profit margin to 35.6% from 36.9%. But selling, general and administrative expenses declined, by 4% to 2.82 billion US dollars (£2.14 billion) for the quarter.
Kraft Foods is preparing to split into two publicly traded companies this year. One will be called Mondelez and focus on its international snack brands such as Cadbury. The other will retain the Kraft name and concentrate on its North American grocery business, which includes Oscar Mayer meats.
The company said it is on track to complete the split by the end of the year.
In North America, the company said its net revenue rose 1.3% with help from price increases and the timing of Easter. Net revenue from Europe rose 4.5%, while net revenue from developing markets rose 8.5% as a result of both higher pricing and increased volume.
In its international snacks business, the company said its global chocolate revenue was up 10%, while global biscuits revenue was up 8%, helped by the rapidly growing popularity of Oreo cookies in China.
One disappointment was the global chewing gum and sweets unit that includes Trident, where revenue rose only 1%. Chief executive Irene Rosenfeld blamed broader economic conditions in Europe. "We remain confident that gum will remain a significant contributor to our long-term growth," she said.