“We’re off to a stronger-than-anticipated start to the year as our teams around the world execute our growth strategy,” said Irene Rosenfeld, chairman and CEO. “Our business fundamentals are solid, and we continue to benefit from brand-building investments which allowed us to successfully deliver net pricing to offset commodities increases and drive top-tier growth. At the same time, we’re generating cost savings to reinvest in further growth and expand margins.”
Net revenues for the first quarter were $12.6bn. Organic Net Revenues grew 4.6%, driven by solid top-line growth in all regions. Pricing, which accounted for 3.7% percentage points of growth, was higher in each geographic region. Volume/mix contributed 0.9% percentage points. The shift of Easter-related shipments into the second quarter tempered growth by approximately 1.5% percentage points.
Operating income was $1.6bn, and operating income margin was 13.1%. Underlying Operating Income, which excludes acquisition-related and Integration Program costs, grew 16.0% to $1.8bn. Underlying Operating Income margin expanded 60 basis points vs the prior year to 13.9%. Key drivers of margin expansion were lower SG&A, despite a significant increase in advertising and consumer (A&C) support, and the benefit of unrealised gains from hedging activities.
Diluted earnings per share were $0.45. Operating EPS(1) increased 6.1% to $0.52, driven by solid operating performance and unrealised gains from hedging activities. Earnings growth was tempered by the impact of higher shares outstanding and higher interest expense related to the February 2010 Cadbury acquisition.
Source: Kraft Foods
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