US food giant Kraft Foods has issued an improved outlook for sales and earnings for 2007 after seeing first-half profits rise over 5%.

Kraft said that, after "strong growth" during the first six months of the year, it is upping its guidance for full-year revenue and earnings per share.

The company said it now expects revenue to rise by at least 4% on an organic basis during 2007, up from a previous estimate of 3-4%. Kraft's earnings per share forecast also rose from $1.50-1.55 a share to $1.55-1.60.

The upbeat tone came after Kraft booked a 5.3% rise in first-half operating income to US$2.3bn. The rise in profits came amid a 6.3% increase in revenue to $17.8bn.

Chairman and CEO Irene Rosenfeld said investment in product quality and marketing had led to the rise in sales.

She said: "We are taking other significant steps to build long-term shareholder value, including expanding our international footprint by acquiring Danone's global biscuit business and actively repurchasing our stock."

However, Rosenfeld warned margins would come under pressure during the second half of the year due to the increased investment and rising commodity costs, particularly diary expenses. She added: "But, it is critical that we invest now in order to lay the foundation for our future growth."

Kraft saw the strongest growth in sales from the EU and its "developing markets" with revenue up 19.5% and 13.4% respectively. Sales from North America, its largest market, rose 1.3%.

In terms of product lines, beverages led the way, with sales up 4%. Convenient meals saw sales rise 3%, snacks and cereals enjoyed revenue growth of just 0.4%, while grocery sales fell 1.6%.