US: Kraft provides details of North American grocery unit
Kraft Foods has released details of the financial performance of its North American grocery business ahead of plans to spin off the unit later this year.
A regulatory filing released after the markets closed yesterday (3 April) confirmed Kraft's previous statements that the North American grocery business generated revenues of US$18.7bn in 2011. Free cash flow, which is operating cash flow minus capital expenditure, rose to $2.3bn in 2011 from $380m in 2010, when the firm acquired UK chocolate maker Cadbury.
However, it emerged in the form that earnings from operations fell 2.5% in the year to $1.8bn while operating margin dropped to 15.7% in 2011 from 16.6% in 2010.
"The filing of the Form 10 Registration Statement is an important step in the process of establishing the North American grocery business as a new, stand-alone company with its own strategic focus and priorities," said chairman and CEO Irene Rosenfeld. "We believe that this business is well-positioned for success as an independent company."
The company announced in August that it would split into a US grocery business, to be called Kraft Foods Group, and an international snacks business, to be called Mondelez International.
The firm has insisted the move would allow each unit to focus on its divergent business strategies. With a strong stable of brands, including Kraft, Oscar Mayer and Maxwell House, the North American grocery business will operate as a high-margin, low-growth business.
"Kraft Foods Group's goal as an independent public company is to deliver superior operating income, strong cash flows and a highly competitive dividend payout while driving revenue growth in its key product categories. To achieve this, the company intends to build on its leading market positions, remain sharply focused on cost structure and superior execution and invest in employee and organisation excellence," Kraft said.
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