Kraft Foods Third-Quarter Profit Beats Analysts' Estimates
Kraft Foods Inc., the world’s second- largest food company, reported third-quarter earnings that beat analysts’ estimates.
Excluding some items, profit was 47 cents, the Northfield, Illinois-based company said today in a statement, beating by a penny the average of 18 analysts’ estimates compiled by Bloomberg. Organic revenue, which excludes acquisitions, divestitures and foreign-currency fluctuations, increased 2.1 percent on higher prices for Kraft’s products.
“The sales metrics were not great,” said Edward Aaron, an analyst at RBC Capital Markets in Denver. “Cadbury was flat, and nearly all of the Kraft base business growth came from increased prices.” Aaron has a “sector perform” rating on Kraft’s stock.
Food companies such as Kraft, Sara Lee Corp. and General Mills Inc. have said they are increasing prices on certain products to cope with rising costs for commodities such as wheat, dairy and sugar. Raw-sugar prices jumped to a 29-year high today on forecasts for lower global production after adverse weather damaged crops in Brazil, the world’s biggest producer.
Kraft Foods North America sales climbed 9.3 percent in the three months through Sept. 30, fueled by Ritz crackers and Chips Ahoy! cookies. Revenue grew 70 percent in developing markets, aided by sales of Oreo cookies in China and Club Social crackers in Brazil.
The company reaffirmed its projection for 2010 earnings of at least $2 a share and organic revenue growth of as much as 4 percent.
In February, Kraft acquired Uxbridge, England-based Cadbury Plc for about 13.6 billion pounds ($20.8 billion) in cash and stock after a five-month standoff. The deal transformed the maker of Velveeta cheese into the world’s biggest confectionary company, and Kraft said in September that the acquisition would produce $1 billion in additional revenue by 2013.
Chief Executive Irene Rosenfeld said in the statement that the integration of Cadbury is proceeding “smoothly and quickly.”
Net income at the maker of Oreos and Cadbury chocolate fell 8.5 percent to $754 million, or 43 cents a share, from $824 million, or 55 cents a share, a year earlier.
Kraft advanced 22 cents today to $31.79 in New York Stock Exchange composite trading. The shares have risen 17 percent this year.
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