Kraft 1Q Profit Up 1.8% As Revenue Strengthens, Margins Weaken

   DOW JONES NEWSWIRES 
 

Kraft Food Inc.'s (KFT) first-quarter earnings rose 1.8% as higher prices helped boost the packaged-food giant's revenue, though increased input costs continued to weigh on margins.

Results topped analyst expectations. The maker of Kraft cheese, Oscar Mayer lunch meats and Planters nuts has been able to raise prices with greater success than most packaged-food companies, posting improved profits in recent periods despite rising commodity costs. The company has continued to redirect cost savings into increased brand marketing and rolled out new products in recent months, helping to offset some weakness in the overall packaged-food market.

Kraft Foods is heading towards a split later this year, when it will create a global snacks company to be named Mondelez International and a business focused on North American grocery products that will retain the Kraft Foods name.

Kraft reported a profit of $813 million, or 46 cents a share, up from $799 million, or 45 cents a share, a year earlier. Excluding spinoff costs, integration costs and other items, operating earnings rose to 57 cents from 52 cents.

Revenue jumped 4.1% to $13.09 billion. On an organic basis, excluding divestitures, acquisitions and currency changes, revenue rose 6.5%, helped by higher pricing.

Analysts polled by Thomson Reuters had most recently predicted earnings of 56 cents a share and revenue of $13.05 billion.

Gross margin narrowed to 35.6% from 36.9% as input costs rose 6.2%.

Operating profit at Kraft's North American business was down 4% as organic revenue increased 3%. European operating profit jumped 25%, while organic revenue climbed 7.2%.

Shares of the company, which affirmed its full-year guidance, slid by 0.5% to $39.40 after hours. The stock is up 17% over the past 12 months.

-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; [e-mail]