Kraft Foods Profit Soars On Gains, But Sales Dampen

(RTTNews) - Packaged food giant Kraft Foods Group Inc. (KRFT), Thursday reported a surge in second-quarter profit, due mainly on gains from post-employment benefit plans. Earnings for the quarter topped Wall Street estimates, but revenues fell short of expectations.

Sales dropped modestly, hurt mostly by the Easter-shipment timing and product pruning. Key segments like grocery and beverage saw weak volumes, exacerbated by commodity and promotional costs, the company said.

For the full year 2013, Kraft Foods raised its earnings outlook to mainly include the gains from post-employment benefit plans, but somewhat softened its overall sales guidance.

This is the fourth quarter Kraft Foods is posting results since its inception as an independent company focused on North American grocery business. Last year, Kraft Foods split from parent Kraft Foods Global Inc., with the international snacks unit named Mondelez International Inc. (MDLZ).

Kraft Foods, based in Northfield, Illinois, posted quarterly net income of $829 million or $1.38 per share, compared with $603 million or $1.02 per share last year.

Results for the quarter included a $604 million, or $0.62 per share, benefit from market-based impacts to post-employment benefit plans. Also included is $0.09 per share of restructuring expense.

On average, 17 Analysts polled by Thomson Reuters expected earnings of $0.66 per share for the quarter. Analysts' estimates typically exclude special items.

The maker of Kraft Cheese, Maxwell House coffee, and Oscar Mayer deli meats, posted quarterly net revenues of $4.74 billion, down from $4.79 billion a year ago. Analysts estimated revenues of $4.81 billion for the quarter.

Grocery sales fell 6.4 percent from a year ago, partly on weakness in Kraft spoonable and pourable dressings. Beverage sales fell 3.2 percent on lower prices, and refrigerated meals edged down 0.7 percent on soft volumes. Cheese sales meanwhile grew 5 percent on higher prices and volume gains.

For fiscal year 2013, Kraft now expect earnings of about $3.40 per share, including the $0.62 year-to-date benefit from market-based impacts to post-employment benefit plans. The company had earlier forecast earnings of $2.75 per share.

Analysts currently expect earnings of $2.79 per share for 2013.

Kraft expects organic net revenue growth in 2013 to be in line with or slightly lower than that of the North American food and beverage market, while earlier, it expected that to be on par.

The company's stock closed Thursday at $57.14, up $0.56 or 0.99%, on a volume of 2.3 million shares on the Nasdaq. In after hours, the stock gained $0.45 or 0.79%.