Kraft earnings up 13% on new products, productivity
NORTHFIELD, ILL. — New products, increased advertising and productivity gains contributed to a 13% increase in earnings for the newly independent Kraft Foods Group, Inc. during the third quarter. The spin-off of Kraft by Mondelēz International, Inc. was completed on Oct. 1.
For the quarter ended Sept. 30, the company had earnings of $470 million, equal to 79c per share on the common stock, which compared with earnings of $417 million, or 70c per share, during the same quarter of the previous year. Revenue for the quarter was $4,606 million, up 3% from $4,474 million during the same quarter of the previous year.
“Our third-quarter results demonstrate the power of our brands, our people and our innovation,” said Tony Vernon, chief executive officer of Kraft. “We have an excellent foundation as a new and independent Kraft, and we’re confident we have what it takes to fulfill our mission of becoming the best food and beverage company in North America.”
Kraft said its financial statements for the third quarter were prepared on a “carve-out” basis, reflecting an allocation of costs incurred by its former parent company.
Operating income within the Beverages segment was $76 million, down 25% from $101 million during the same quarter of the previous year. Maxwell House, Gevalia, Kool-Aid Jammers and MiO delivered strong consumption gains, but segment results were adversely affected by lower merchandising levels of Capri Sun and lower pricing in coffee as well as restructuring costs.
The Grocery segment had an operating income of $302 million, down 4% from $315 million during the same quarter of the previous year. Brand-building investments and innovation drove gains in Kraft Macaroni & Cheese, Velveeta dinners and Cool Whip, but there were smaller volumes in Jell-O and Planters brands. Brand-building investments, restructuring costs and higher overheads pressured results in the segment.
Refrigerated Meals had operating income of $116 million, up 11% from $105 million during the same quarter of the previous year. Innovations with Lunchables and Oscar Mayer delivered growth. Increased advertising, productivity gains, better alignment of prices and input costs as well as an improved product mix contributed to strength in the segment.
Operating income within the Cheese segment totaled $159 million, up 10% from $145 million in the same period a year ago. The gain was driven by Kraft natural cheese, Philadelphia and Velveeta.
Earnings for the company as a whole for the nine months ended Sept. 30 increased 7% to $1,541 million, or $2.60 per share, which compared with income of $1,438 million, or $2.43 per share, during the same period of the previous year. Revenue for the nine months was $13,845 million, up 2% from $13,620 million during the same period of the previous year.
For 2013, the company anticipates earnings per share of approximately $2.60.