* Kraft EPS seen at 48 cents vs year-earlier 44 cents
* Kraft needs to show revenue progress in pitch to Cadbury
* Deadline for formal Cadbury bid: Nov. 9
By Brad Dorfman
CHICAGO, Nov 3 Kraft Foods Inc KFT.N will
need to show progress in cutting costs and improving organic
revenue when it reports earnings on Tuesday, in a bid to
convince Cadbury CBRY.L shareholders it is a viable deal
Lower commodity prices and cost controls helped other
consumer-staples companies beat analyst estimates in recent
weeks, including Kellogg Co (K.N), Clorox Co (CLX.N) and
General Mills Inc (GIS.N). They also came in slightly ahead of
muted revenue expectations.
If that trend holds for Kraft -- which is due to present a
formal takeover bid for UK confectioner Cadbury by Nov. 9 -- it
could boost the company's shares and make for a more compelling
"The trend has been for food companies across the board to
beat the number," Edward Jones analyst Matt Arnold said. "I
haven't seen many companies in consumers staples post a miss
Kraft is likely to stick by its initial cash and stock
proposal to Cadbury shareholders that was disclosed on Sept. 7,
sources familiar with the situation told Reuters. [ID:nL238518]
That deal was valued at 745 pence a share, or 10.2 billion
British pounds ($16.7 billion), at the time. The proposed bid
was worth 733.4 pence, or 10.06 billion pounds ($16.5 billion)
Monday afternoon based on the decline in Kraft shares.
The world's No. 2 foodmaker is scheduled to post
third-quarter earnings after the New York Stock Exchange closes
at 4 p.m. EST (2100 GMT).
LETTING THE NUMBERS DO THE TALKING
Kraft Chief Executive Officer Irene Rosenfeld is not
expected to take questions about the Cadbury bid when she talks
to analysts about earnings on Tuesday, a spokesman said.
But the results will help set the stage for Kraft's bid.
The maker of Velveeta cheese and Oreo cookies is expected
to post earnings of 48 cents a share in the quarter, according
to Thomson Reuters I/B/E/S, up from 44 cents a year earlier,
with lower commodity costs and its own cost-cutting measures
helping boost profits.
But revenue is expected to fall to $10.32 billion from
$10.46 billion, hurt by divestitures and strength in the dollar
compared with a year earlier.
Cadbury chairman Roger Carr dubbed Kraft a "low growth
conglomerate" in his letter to Rosenfeld rejecting the initial
offer and analysts say Kraft will need to show sustainable
growth prospects to overcome that perception.
In the past three quarters, Kraft has actually disappointed
analysts in terms of revenue, with sales coming in 2 percent, 3
percent and 4.6 percent below expectations, according to
Thomson Reuters I/B/E/S.
Earnings per share have been better, with the company
reporting earnings of 4.4 percent more than analysts expected
in the second quarter and 13.3 percent more than expectations
in the first quarter.
Kraft's earnings' report comes almost two weeks after
Cadbury reported a 7 percent rise in underlying sales for the
third quarter, beating even the most bullish forecasts.
(Reporting by Brad Dorfman; editing by Carol Bishopric)