Higher prices boost Kraft profit in Q1
The maker of Oreo cookies, Cadbury, Milka and Lacta chocolate, Jacobs coffee, and Tang drink mix reported net profit of $813m in the quarter, or 46 cents per share, up from $799m, or 45 cents per share in the prior year period. Net revenue was up 4% to $13.09bn.
In a conference call with investors, Kraft Foods chairman and CEO Irene Rosenfeld said that biscuit sales were solid in North America and Europe, and were up 8% globally, with especially strong growth in developing markets.
“China was up 40% leading the way with Oreo growing by more than 60%. Tuc and Club Social crackers also continued to post strong performance up 12% across developing markets,” she said.
New product launches, including the recent introduction of belVita breakfast biscuits in North America, also contributed to growth, she said.
The company’s results also benefitted from Easter falling earlier in April this year, resulting in an increase in Easter chocolate shipments to retailers during the first quarter.
However, Rosenfeld said the company was disappointed by gum and candy sales, which were up 1% on the prior year period.
“Frankly, it has taken us longer to change gum's trajectory than we had anticipated, largely due to the sluggishness of the macroenvironment. In particular, Europe, especially Southern Europe, was a significant factor, tempering our global gum and candy growth,” she said, adding that this is likely to continue until the European economy improves.
The company said that is seeking $2.9bn in damages in its coffee distribution dispute with Starbucks.
Kraft also reaffirmed its full-year outlook, expecting net revenue growth of 5% and growth in earnings per share of 9%, and said it was on track with its plan to split into two separate companies later in the year.
After the split, Kraft’s snacking business will be known as Mondelez International, while its North American grocery business will retain the Kraft Foods name.
