Kraft Foods, the US food giant, files its second-quarter results later today (4 August) and, much like for the first three months of 2009, the company is set to book mixed numbers.

In May, the company behind Milka chocolate and Philapdelphia cheese cheered the market when it booked a 10% increase in net earnings.

Its shares jumped but, nonetheless, Kraft's numbers still hinted at challenges for the company. Sales were up but were boosted by price hikes - volumes were down.

On a reported basis, net revenues fell 6.5% to $9.4bn, thanks largely to currency fluctuations.

Chris Growe, an analyst at Stifel Nicolaus, says foreign exchange pressure on Kraft are likely to be "formidable"during 2009, although a weakening of the US dollar could enable the group to increase its forecast for earnings per share.

However, Stifel, which has a 'hold' rating on Kraft's shares, says the company's second-quarter results face a difficult comparison with a year ago when the group's numbers were helped by US$150m in hedging gains.

Stifel estimates that Kraft will file a second-quarter earnings per share of US$0.51 - down 12% on the year.

Neverthless, the analysts see Kraft's sales volumes stabilising during its second quarter, which, they write, "represents a significant improvement" over previous quarters.

"On an underlying basis, we are looking for organic sales growth of around 3%, on 3% price realisation and virtually flat volumes," Growe says.

The analysts at Stifel have also forecast a 4% drop in operating income, thanks mainly to the effect foreign exchange has on Kraft's international results.

Stifel, however, believes Kraft seems "a bit more optimistic" about its prospects outside the US.

"While sales could continue to be soft in the Europe division (weak consumer environment), we expect continued strong results in the Developing Markets division, underlying profits should be up strongly," Growe says.

"We believe the Developing Markets division will slow a bit, but generally maintain robust underlying sales and profit growth due to the company's key positions in markets such as Brazil, Mexico, and China."