NORTHFIELD, ILL. — Net income of Kraft Foods Inc. in the first quarter ended March 31 was $813 million, equal to 46c per share on the common stock, up 2% from $799 million, or 46c per share, in the same period a year ago. Sales were $13,093 million, up 4% from $12,573 million.
Operating income of the U.S. Cheese segment jumped 25% in the first quarter from the same period a year ago; the U.S. Beverages segment was down 39%; U.S. Convenient Meals was down 11%; U.S. Grocery was up 6%; and U.S. Snacks was up 7%. Kraft Foods Europe enjoyed a 25% jump in operating income in the quarter while Kraft Foods Developing Markets was up 30%.
“Our brand building investments continue to win over consumers around the world in these tough economic times, and that’s fueling our strong business momentum,” said Irene Rosenfeld, chairman and chief executive officer. “We remain on track to create two industry-leading companies by the end of this year. As we execute this plan, I’m confident we will again deliver top-tier results for our shareholders in 2012.”
Overall sales in North America rose 1.3%, including organic growth of 3% due to higher pricing across each segment. Volume and mix were negatives. Overall operating income in North America was down 4%, but this drop included a 7.2 percentage point impact from restructuring program costs in addition to a 1.5 point impact from the loss of the Starbucks consumer packaged goods business. Absent these hits, operating income would have been up mid-single digits, the company said.
In Europe, net revenues were up 4.5%. The jump in operating income of 25% reflected lower integration costs (12.4 percentage point impact) versus the private year but a negative 3.0 point impact from currency. With an apples-to-apples comparison, operating income in Europe would have been up mid-teens, Kraft said.
In developing markets, an 8.5% increase in net sales was driven by higher pricing, higher volumes and beneficial mix changes. The 30% jump in operating income included a 5.5 percentage point benefit from lower integration costs, and a 0.9 point currency gain.
“Excluding these factors, the strong double-digit growth in segment operating income was driven by volume/mix gains, effective management of input costs and a gain on the sale of an asset,” Kraft said. “This was partially offset by a double-digit increase in advertising and consumer support, investments in the sales force and an asset impairment charge.”