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Kraft Foods reports Q1 EPS up 29% to $0.45
Kraft Foods Inc has reported first-quarter 2009 results driven by strong gains from operations. Organic net revenue growth reflected the impact of cost-driven pricing actions taken in 2008, together with better than expected volume/mix.
Kraft Foods Inc has reported first-quarter 2009 results driven by strong gains from operations. Organic net revenue growth reflected the impact of cost-driven pricing actions taken in 2008, together with better than expected volume/mix.
Operating gains across nearly all business segments drove operating income growth, margin expansion and higher earnings per share.
“We’ve had a solid start to the year, and we’re on track to deliver our 2009 commitments,” said Irene Rosenfeld, chairman and CEO. “Our business momentum remains strong despite a challenging consumer environment. We’re intensely focused on investing our cost savings to build our core brands, improve our product mix and drive superior retail execution. This will further enhance our profit margins and improve market shares as the year unfolds.”
Highlights
- Net revenues declined 6.5% to $9.4bn, including the unfavourable impact of 7.9 percentage points from currency and 0.9 pecentage points from divestitures.
- Organic net revenues grew 2.3%, driven by 5.7 pecentage points from pricing that was partially offset by negative 3.4 pecentage points from volume/mix. During the quarter, net revenues were negatively impacted by approximately 1.6 pecentage points from the shift of Easter-related shipments into second quarter 2009 and from the planned discontinuation of less profitable product lines.
- Operating income increased 18.8% from the prior year to $1,268m. Currency translation negatively impacted operating income growth by 10.3 pecentage points, essentially offsetting 9.8 pecentage points of growth from the absence of Restructuring Program charges.
- Operating income margin increased 290 basis points year over year to 13.5%. Approximately 90 basis points of the increase were attributable to the absence of Restructuring Program charges, while product mix improved margins significantly. This positive development reflects the discontinuation of less profitable product lines and strategic investments in priority categories, core brands and key markets. In addition, the combination of cost-driven price increases taken over the past year and successful cost savings initiatives more than offset higher input costs. The results also include the benefit of approximately $87m of unrealised, mark-to-market gains related to the company’s commodity hedging activities, compared to an approximately $25m benefit in the prior year.
- The tax rate of 33% was up from 28.2% in the prior year period. The first-quarter 2009 rate is higher than the company’s full-year guidance of 31.5% due to the timing of discrete items.
- Earnings per share were $0.45, up from $0.39 in first-quarter 2008.
Source: Kraft Foods
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