US food group Kraft Foods has reported third quarter net revenue growth of 2.3% to US$8.2bn, attributing the growth to improved product mix and solid earnings gains driven by higher gross margins, restructuring savings and share repurchases. But Kraft's CEO Irene Rosenfeld conceded that the results were "mixed".
 
Third-quarter diluted earnings per share increased by 12.5% to $0.45 but excluding various items affecting comparability, diluted EPS rose by 9.5% to $0.46.
 
Kraft said revenue growth was driven by North American convenient meals, biscuits, powdered beverages, cheese and cereals as well as Latin America and Eastern Europe.
 
Operating income increased by 18.2% to $1.4bn. Excluding asset impairment, exit and implementation costs and gains/losses on the sale of businesses, Kraft said operating profits rose by 5.6% and operating income margin increased to 15.2% from 14.8%. Lower dairy costs, improved product mix and ongoing manufacturing efficiencies and cost savings, partially offset by higher energy and packaging costs, which had a positive impact on operating profit, Kraft said. The improved operating profit also reflected higher marketing spending to support brand investments, the company added.
 
Net earnings rose by 11% to $748m for the quarter. Excluding asset impairment, exit and implementation costs and the gains/losses on disposals, net earnings grew by 7.4%, Kraft said.
 
"Our third-quarter results were mixed," said Rosenfeld. "Our restructuring efforts have enabled us to fund a number of successful initiatives in some key growth areas, including 'better-for-you' products, snacking and convenient meals. However, while income growth was strong, our aggregate top-line growth is not where it needs to be. We must continue to invest to build our momentum and generate growth more broadly."
 
Kraft has raised its EPS guidance for 2006 to between $1.86 and $1.89 per diluted share from a $1.78 to $1.83 range. The company said the upgraded forecast reflected the third-quarter $0.09 one-time gain related to Kraft's redemption of its interest in United Biscuits and a projected fourth-quarter $0.10 one-time gain for the divestiture of the Minute Rice brand and assets.