(Adds CEO and CFO comments and operating income figure)
By Anjali Athavaley
NEW YORK, July 30 Kraft Foods Group Inc
said on Wednesday that its second-quarter revenue barely rose as
price increases it implemented to cover rising commodity costs
hurt consumer demand.
Revenue rose 0.7 percent to $4.7 billion, helped by the
Easter holiday which fell within the second quarter this year.
Excluding the impact from Easter, Kraft, whose brands include
Jell-O and Maxwell House coffee, said sales volumes of products
like cheeses and cold cuts were hurt by the price hikes, which
the company imposed on half its products.
The company said its net income fell to $482 million, or 80
cents per share, from $829 million, or $1.38 per share, a year
ago when the company benefited from a gain tied to employee
pensions. Analysts on average were expecting 82 cents a share,
according to Thomson Reuters I/B/E/S.
Excluding the benefit, Kraft said operating income rose
roughly 10 percent to $874 million. Its shares were down 2
percent in after-market trading.
Commodity costs were not the only challenge in a quarter
that reflected "a rare confluence of events," Chief Executive
Officer Tony Vernon said on a conference call with analysts.
Kraft, like others in the packaged food industry, is dealing
with a tough environment as consumers look to save money and
increasingly shop for healthier products.
The company lowered prices through Easter, Memorial Day and
July 4th promotions on products like Velveeta dinners and Capri
Sun drinks, leading to a decline in revenues in the company's
meat and desserts business and flat beverages sales.
"When we take a close look in the mirror, it's clear our
report card is mixed from an operating perspective during the
first half of the year," Chief Financial Officer Teri List-Stoll
told analysts. "In a couple of our businesses ... we relied more
on promotional and coupon activity in the second quarter than we
would want to."
(Reporting by Anjali Athavaley; Editing by Cynthia Osterman)