By Nathalie Tadena
Kraft Food Inc.'s (KFT) second-quarter earnings increased 5.4%
as the packaged-food giant's margins improved, despite a surprise
drop in revenue.
Thursday, Kraft also said it will complete its split into two
companies on Oct. 1. The separation will create a global snacks
company to be named Mondelez International that will trade under
the ticker symbol MDLZ and a business focused on North American
grocery products that will retain the Kraft Foods name and trade
under the symbol KRFT.
The maker of Kraft cheese, Oscar Mayer lunch meats and Planters
nuts has been able to pass along price increases with greater
success than most packaged-food companies, posting improved profits
in recent periods despite rising commodity costs. But the higher
prices have contributed to Kraft's losing market share in some of
its North America and developing markets categories. Rather than
discounting to improve market share, Kraft has said it will
continue to use cost savings to invest in marketing and rolling out
new products.
Kraft reported a profit of $1.03 billion, or 58 cents a share,
up from $976 million, or 55 cents a share, a year earlier.
Excluding spinoff costs, integration costs and other items,
operating earnings rose 70 cents from 62 cents.
Revenue fell 4.3% to $13.29 billion, due to currency-exchange
headwinds and the impact of accounting calendar changes in the
year-earlier period. On an organic basis, excluding divestitures,
acquisitions and foreign-exchange impacts, revenue increased 3.4%,
driven by growth from its Power Brands.
Analysts polled by Thomson Reuters had most recently predicted
earnings of 66 cents a share and revenue of $13.96 billion.
Gross margin widened to 36.7% from 35.1%, though input costs
rose 6.6%.
Operating profit at Kraft's North American business was up 3.1%
as organic revenue improved 1.7%. European operating profit slipped
4.6%, though organic revenue was up 1.4%.
Shares of the company, which backed its full-year guidance, rose
1.1% to $39.36 after hours. The stock is up 4.2 over the past 12
months.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires