CHICAGO Kraft Foods Inc KFT.N on Wednesday posted a lower quarterly profit, hit by rising ingredient and commodity costs and spending on new products and marketing, although sales jumped.
The largest North American food maker, with brands that include Oreo cookies and Oscar Mayer lunch meat, said profit was $608 million, or 40 cents a share, compared with $702 million, or 43 cents a share, a year earlier.
Excluding one-time items, earnings were 44 cents a share, unchanged from a year earlier. Analysts on average forecast 41 cents a share, according to Reuters Estimates.
Like most food companies, Kraft has faced soaring costs for ingredients such as wheat and cocoa. But at the same time, Kraft is in the midst of efforts to boost sales and has been spending more on new products and marketing.
Sales rose 20.8 percent to $10.37 billion, helped by price increases, the acquisition of Groupe Danone's (DANO.PA) cookie business and the weaker U.S. dollar, which boosts the value of overseas sales.
But sales were strong even without the benefit of the weak dollar. Organic revenue, which excludes currency, acquisitions and divestitures, was up 8 percent.
Higher prices and a shift in the sales mix to higher-priced items accounted for most of the organic revenue increase.
But volume, a measure of products shipped, was up only slightly as price increases cut into ready-to-drink beverage volume.
For the year, the company said it now expects organic revenue to rise at least 5 percent, up from its previous forecast of at least 4 percent, due to more price increases.
The company also stood by its full-year earnings-per-share forecast of at least $1.90, excluding items.
(Reporting by Brad Dorfman, editing by Maureen Bavdek)