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Oscar Mayer Grows in Third Quarter
Madistan.com ^ | October 29, 2008 | Staff Writer

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.


TOPICS: Business/Economy; US: Wisconsin
KEYWORDS: shutupbeavis
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When is Nancy Pelosi going to call the Kraft Execs up to Capitol Hill and shake them down for these 'windfall profits' from cereal, hot dogs and mac-n-cheese?

*Rolleyes*

1 posted on 10/30/2008 11:56:29 AM PDT by Diana in Wisconsin
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To: Diana in Wisconsin

They grow in the microwave too...coinky-dink?


2 posted on 10/30/2008 11:59:39 AM PDT by mancini
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To: Diana in Wisconsin

Those Fat Cat at Big Lunch Meat just laugh all the way to the bank!


3 posted on 10/30/2008 12:01:45 PM PDT by Holicheese (Get up Tom Brady, get up! PLEASE!!)
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To: Diana in Wisconsin
Oscar Mayer Grows in Third Quarter

Why, did Ms. Oscar Mayer spend most of the quarter in the buff?

4 posted on 10/30/2008 12:02:24 PM PDT by library user
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To: Diana in Wisconsin

“’Cause if I were an Oscar Meyer wienerrrrr
Everyone would be in love with meeeeeee”.


5 posted on 10/30/2008 12:02:39 PM PDT by Past Your Eyes (You knew the job was dangerous when you took it.)
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To: Diana in Wisconsin
Oscar Mayer Grows in Third Quarter

Yeah! Hot dogs for everyone!

6 posted on 10/30/2008 12:05:29 PM PDT by MAexile (Bats left, votes right)
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To: library user

Alternate Headline:

“Wiener Giant Grows in 3rd Quarter”


7 posted on 10/30/2008 12:06:01 PM PDT by 43north (McCain/Palin '08 - Now That's the Ticket!!!)
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To: Diana in Wisconsin

TAX and REGULATE Big Wiener!


8 posted on 10/30/2008 12:06:09 PM PDT by yobid (Tax me MORE so I can FEEL more neighborly.)
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To: 43north

Beat me to the punch!


9 posted on 10/30/2008 12:07:18 PM PDT by bolobaby
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To: mancini

This just cries out for wiener jokes...


10 posted on 10/30/2008 12:07:47 PM PDT by MAGICAL CHICAGO CRIME PUPPET
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To: MAGICAL CHICAGO CRIME PUPPET

Big Growing Weiner Bump!


11 posted on 10/30/2008 12:09:57 PM PDT by Frank_Discussion (May the wings of Liberty never lose a feather!)
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To: MAGICAL CHICAGO CRIME PUPPET
This just cries out for wiener jokes...

I won't dog ya if ya get a little carried away. ;-)

12 posted on 10/30/2008 12:12:54 PM PDT by mancini
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To: Past Your Eyes

13 posted on 10/30/2008 12:16:47 PM PDT by andy58-in-nh (Somewhere in Illinois, a community is missing its organizer.)
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To: andy58-in-nh
Thanks to our "Employee of the Month"


14 posted on 10/30/2008 12:17:41 PM PDT by mmichaels1970 (Stand up for CHUCK!)
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To: andy58-in-nh

ROFLMAO!!
Any FReeping going on, Andy?


15 posted on 10/30/2008 12:20:05 PM PDT by Past Your Eyes (You knew the job was dangerous when you took it.)
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To: Diana in Wisconsin

It’s all of those laid-off Wall Streeters switcing from caviar to bologna.


16 posted on 10/30/2008 12:20:12 PM PDT by Oshkalaboomboom
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To: Diana in Wisconsin

It’s all of those laid-off Wall Streeters switching from caviar and tenderloin to hot dogs and bologna.


17 posted on 10/30/2008 12:20:53 PM PDT by Oshkalaboomboom
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To: mancini

I think this punfest attempt has gone down the tube.


18 posted on 10/30/2008 12:23:11 PM PDT by Past Your Eyes (You knew the job was dangerous when you took it.)
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To: Diana in Wisconsin

I realized a couple of months back that investing in mac n’ cheese and hot dogs would be a smart thing to do. :)


19 posted on 10/30/2008 12:37:04 PM PDT by Texas_shutterbug
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To: Past Your Eyes
I think this punfest attempt has gone down the tube.

You're right, I'm not sure which one is wurst.

20 posted on 10/30/2008 12:42:04 PM PDT by CrazyIvan (If you read only one book this year, read "Stolen Valor".)
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