US food giant Kraft Foods has posted a 13% drop in first-quarter net income as a result of rising dairy prices.

Net income declined 13% to US$608m in the quarter to 31 March, down from $702m for the same period last year.

Quarterly net revenues increased 20.8% to $10.4bn, including favourable impacts of 8.3% from acquisitions and 5.1% from currency, partially offset by an unfavourable impact of 0.6% from divestitures.

“While input costs remain high, I am confident that our ongoing programs to lower overhead costs and invest in our brands will enable us to deliver our targeted earnings in 2008 and beyond,” said CEO Irene Rosenfeld.

The group’s investment in marketing drove strong growth across all key markets in the company’s Eastern Europe, Middle East & Africa regions. Growth in the Latin America region was driven by pricing and solid volume gains, particularly in Brazil, Argentina, and Venezuela.

Kraft has raised its outlook for 2008 organic net revenue growth to around 5%, up from previous expectations of 4% resulting from further pricing actions to offset rising input costs.