Kraft sees growth despite pruning products

Tue Feb 21, 2012 8:50am EST

A woman grabs a box of Kraft Macaroni & Cheese from a shelf at a Walgreens store in Willowbrook, Illinois January 19, 2010. REUTERS/Frank Polich

A woman grabs a box of Kraft Macaroni & Cheese from a shelf at a Walgreens store in Willowbrook, Illinois January 19, 2010.

Credit: Reuters/Frank Polich

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(Reuters) - Kraft Foods Inc KFT.N forecast earnings growth of at least 9 percent this year even as it prunes its portfolio of North American brands.

Kraft, North America's largest packaged food maker, will separate into two companies later this year. One will focus on snacks like Cadbury chocolate and Oreo cookies, and the other will focus on North American grocery brands including Maxwell House coffee and Oscar Mayer lunch meat.

Kraft forecast 2012 net revenue growth of about 5 percent, including a hit of up to one percentage point from "product pruning" in North America.

The company said it expected operating earnings to rise at least 9 percent on a constant-currency basis, reflecting a higher tax rate and a 4 percentage point hit from higher pension costs.

Shares of Kraft were up 1.1 percent at $38.44 in trading before the market opened.

Kraft also said it would incur one-time costs of $1.6 billion to $1.8 billion as it prepares its split. It also might incur fees of between $400 million and $800 million as it migrates debt to the North American grocery company.

The company also reported quarterly earnings that met Wall Street estimates.

It said net income was $830 million, or 47 cents per share, in the fourth quarter, up from $540 million, or 31 cents per share, a year earlier.

Excluding items, earnings were 57 cents per share, in line with the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 6.6 percent to $14.7 billion. Organic net revenue, which excludes the effects of acquisitions, divestitures, currency and calendar changes, rose 6.1 percent.

Organic revenue rose 7 percent in North America, 3.1 percent in Europe and 7.2 percent in developing markets.

(Reporting by Martinne Geller in Boca Raton, Florida; Editing by Lisa Von Ahn)

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Comments (1)
Dave1968 wrote:
That’s a good Idea – If they split now they’ll be able to get back together latter!

Feb 21, 2012 7:55am EST  --  Report as abuse
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