* Sees '13 EPS $1.50-$1.55, below some Wall St estimates
* Sees '13 revenue growth at low end of 5-7 pct range
* Shares down 1.4 pct in afterhours trading
By Martinne Geller
Sept 6 Kraft Foods Inc warned on
Thursday that 2013 earnings for its standalone international
snack company would likely be lower than some forecasts due to
unfavourable foreign exchange rates.
Kraft is splitting next month into a snack company called
Mondelez International and a North American grocery business
with the Kraft name -- giving investors the option to bet on a
fast growing snacks business or choose more stable dividends
offered by selling groceries.
Mondelez, set to be a $36 billion company that generates 45
percent of its sales from developing markets and home to Cadbury
chocolate, Oreo cookies and Trident gum, expects double-digit
growth in operating earnings per share, excluding the impact of
currency, over the long-term.
But due to its large international footprint, the recent
weakening of various currencies versus the U.S. dollar will
likely result in a 15-cent-per-share hit to earnings next year,
Kraft said in its first official forecast for Mondelez.
For 2013, Mondelez expects to earn $1.50 to $1.55 per share
-- below some analysts' forecasts and helping send Kraft's
shares 1.4 percent lower in after-hours trade.
It expects revenue growth of 5 to 7 percent in the long term
but next year is likely to see it come in at the lower end of
the range, due to a smaller contribution from price increases.
"That is the prime reason for being potentially at the lower
end in the near-term," said Irene Rosenfeld, Kraft's current
chief executive, who will lead Mondelez, in an interview.
She said easing coffee prices meant Mondelez is likely to
lower prices of its coffee, which include the popular Maxwell
House brand. Maxwell House in the United States will stay with
Kraft, but Mondelez will sell it overseas.
Mondelez also noted the gum business has been very hard hit
by the economy. Executives said people chew a lot of gum while
at work, or on their way to work, and that if they are working
less, they chew gum less.
"That is a business where they've struggled for some time,
and it will be interesting to see whether their plans bear
fruit, even absent an improvement in the economy," said
Morningstar analyst Erin Lash.
Mondelez's priorities for cash allocation include investing
in its existing business by bringing its products to new markets
and developing new products. The company is also open to
tack-on acquisitions, Rosenfeld said, that could increase scale
or its portfolio.
Following the meeting of Mondelez executives with investors
on Thursday, Kraft Foods executives will meet with investors on
Friday. The smaller Kraft Foods Group will be concentrated in
North America, with brands like Oscar Mayer lunch meat and
The spin-off is planned for October 1.
Kraft shares fell to $41.71 in after-hours trade, from their
close at $42.32 on the Nasdaq.