Kraft income jumps on Cadbury acquisition
NORTHFIELD, ILL. — Net income at Kraft Foods Inc. in the first quarter ended March 31 soared to $1,883 million, equal to $1.17 per share on the common stock, boosted by the sale of its frozen pizza business to Nestle S.A. as well as the acquisition of Cadbury P.L.C. The results compared with net income of $660 million, or 45c per share, in the first quarter of fiscal 2009.
Sales were $11,318,000, up 26% from $8,979 million in the same period a year ago. The Cadbury acquisition contributed 18.9 percentage points of the growth, while currency added 4.2 percentage points, helping offset a 0.4 percentage point impact from divestitures.
“Our first-quarter results are early evidence of our future potential in combination with Cadbury,” said Irene Rosenfeld, chairman and chief executive officer. “We demonstrated strong momentum in our Kraft Foods’ base business, including high-quality top-line growth and strong operating gains. In addition, our Cadbury business delivered solid financial results.”
Operating income at Kraft Foods North America rose 20% to $983 million, up from $817 million in the same period a year ago. Net sales rose 7% to $5,688 million.
Kraft said its priority categories grew 2.5% behind investment in several key programs, including new advertising and innovation behind Maxwell House coffee; the launch of an integrated marketing campaign for Oscar Mayer as well as new products in bacon for Oscar Mayer Lunchables; new advertising for Oreo cookies, Ritz and Wheat Thins crackers; and improved product quality, innovation and incremental distribution of Planters snack nuts.
Within Kraft Foods North America, operating income of the U.S. Grocery business was $286 million, up 9% from $262 million, while sales in the unit fell to $816 million from $818 million.
Operating income of U.S. Convenient Meals rose 38% to $84 million from $61 million, boosted by a 5% gain in sales to $770 million.
Operating income in the U.S. Cheese division rose a shade more than 2% to $134 million from $131 million. Sales in the unit, meanwhile, fell 6% to $845 million.
In U.S. Snacks, operating income soared 61% to $207 million from $129 million. Sales climbed 16% to $1,392 million from $1,197 million.
Operating income in the U.S. Beverages business rose 6% to $172 million from $162 million on a 5% gain in sales to $821 million.
Kraft Foods Europe posted operating income of $289 million during the first quarter, up 98% from $146 million in the same period a year ago. Net sales rose 41% to $2,709 million, boosted in large part to a 30.7 percentage point impact from the Cadbury acquisition.
Operating income within Kraft Foods Developing Markets rose 73% to $359 million from $207 million on a 67% gain in sales to $2,921 million.
Looking ahead, Kraft said it expects combined organic net revenue growth of at least 4% in 2010, driven by approximately 4% organic net revenue growth of Kraft Foods’ base business and approximately 5% organic net revenue growth of Cadbury.