Kraft Foods (KFT) reported a 13% jump in second-quarter profit on improved sales in Europe and emerging markets. Kraft gained greater exposure to these markets following its $19 billion Cadbury deal.
The world's second-largest food company said net income rose to $937 million, or 53 cents a share, from $827 million, or 56 cents, a year earlier. Excluding items, it earned 60 cents per share, topping estimates of 52 cents a share.
Fueled by the Cadbury acquisition, net revenue jumped 25% to $12.3 billion, in line with Wall Street expectations. On an organic basis -- which excludes divestitures, acquisitions and currency changes -- revenue climbed 2.2% at Kraft and 3.3% at Cadbury. Prices were down 0.2%.
Sales for Kraft Foods North America climbed 6.3%, on strong sales of new gums from Trident and Dentyne. Europe's 34% climb in revenue came from biscuits, while the 73% sales growth in developing markets was led by Oreo cookies, Tang powdered beverages, gum and chocolate, with chocolate sales particularly growing in India.
Kraft said it now expects total cost savings of at least $750 million from the integration of Cadbury, up from an earlier savings forecast of at least $675 million. But it also said it expects its integration program to cost $1.5 billion, up from a prior forecast of $1.3 billion. Kraft Foods cut its forecast for 2010 organic revenue growth to a range of 3% to 4% from its previous guidance of at least 4%, but it affirmed its $2-per-share operating earnings guidance.
Like other food companies, such as Unilever (UN), which also reported earnings Thursday, Kraft has been aggressive with its promotional activities, especially in the U.S., to offset tight consumer spending. And also like the other food companies, higher raw material costs affected its profit. But unlike Unilever, Kraft managed to beat estimates.
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