Posted on 10/30/2008 11:56:28 AM PDT by Diana in Wisconsin
Kraft Foods Inc. on Wednesday reported that its third-quarter profit more than doubled because of a one-time gain from the $2.6 billion sale of its Post cereals business.
Including the proceeds from the Post sale, the maker of Oscar Mayer luncheon meat and Ritz crackers said it earned $1.4 billion, or 93 cents per share, in the quarter that ended Sept. 30. That compares to profit of $596 million, or 38 cents per share, a year ago.
The Post cereals sale added 57 cents to per-share profit, which was lower by 7 cents due to asset impairment and exit costs. Excluding special items, the company earned 44 cents per share, beating a Wall Street consensus by a penny. Analysts polled by Thomson Reuters expected 43 cents per share and revenue of $10.5 billion.
Revenues rose nearly 20 percent to $10.46 billion. That gain includes a 0.9 percent drop in volume, though sales were helped by an 8.9 percent increase in pricing.
Kraft said organic net revenues in the Convenient Meals segment that includes Madison-based Oscar Mayer Foods grew 8.6 percent, driven by cost-driven price increases and favorable product mix. Strong results for DiGiorno and California Pizza Kitchen pizzas, including the launch of the "For One" line of individual size pizzas, as well as ongoing gains from Oscar Mayer Deli Fresh meats and Oscar Mayer Deli Creations sandwiches drove revenue growth. Operating income excluding items declined 5.8 percent as pricing actions lagged input cost increases, unfavorable mix and higher marketing and overhead expenses.
The company noted it was seeing significant gains from marketing the affordability of Kraft's macaroni and cheese lines and Jell-O dry packaged desserts. Irene Rosenfeld, Kraft's chairman and chief executive, said the company, with its trove of brands, is poised to grow well as consumers continue to look for value.
"Brands like Kool-Aid, like Mac and Cheese, like Jell-O are faring particularly well in the current environment and I see no sign that that will stop in the future," she told investors on a conference call.
Food companies have been increasing prices to recoup lost money due to high costs for key ingredients like corn and oil. Kraft said in the quarter, input costs were up $700 million and are expected to be up $2 billion this year over 2007. Input costs are coming down, though they'll still be above historic levels, and pricing is expected to remain in place, which will further pad profit margins.
The Northfield, Ill.-based company said it was making a conscious effort to do away with less profitable volume, which contributed to the volume drop in the quarter.
"In the near term, as absolute price points remain at historic highs we would expect volume pressure and difficult comparisons to persist," chief financial officer Tim McLevish told investors on a conference call.
The company is continuing its efforts to add new types of products, which can sell at higher prices and saw volume growth in about half of its North American product segments, including beverages, convenient meals and grocery.
Volume slipped in the U.S. snack segment as revenue dropped in snack bars, due to removing some product from the market and weakness from higher pricing.
The company reiterated its estimates for full-year profit in 2008 and 2009. It said it would earn $1.88 per share this year, reflecting a lower tax rate, higher interest and less favorable foreign exchange rates. In 2009, the company predicted it would earn $2 per share.
Analysts expect Kraft to earn $1.90 per share in 2008 and $2.02 per share in 2009.
Shares rose slightly in premarket trading to $29.05. They closed Tuesday at $28.88.
*Rolleyes*
They grow in the microwave too...coinky-dink?
Those Fat Cat at Big Lunch Meat just laugh all the way to the bank!
Why, did Ms. Oscar Mayer spend most of the quarter in the buff?
“’Cause if I were an Oscar Meyer wienerrrrr
Everyone would be in love with meeeeeee”.
Yeah! Hot dogs for everyone!
Alternate Headline:
“Wiener Giant Grows in 3rd Quarter”
TAX and REGULATE Big Wiener!
Beat me to the punch!
This just cries out for wiener jokes...
Big Growing Weiner Bump!
I won't dog ya if ya get a little carried away. ;-)
ROFLMAO!!
Any FReeping going on, Andy?
It’s all of those laid-off Wall Streeters switcing from caviar to bologna.
It’s all of those laid-off Wall Streeters switching from caviar and tenderloin to hot dogs and bologna.
I think this punfest attempt has gone down the tube.
I realized a couple of months back that investing in mac n’ cheese and hot dogs would be a smart thing to do. :)
You're right, I'm not sure which one is wurst.
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