US food group Kraft Foods has posted a 45% increase in diluted earnings per share to US$0.61, which it said reflected gains in net revenues and progress on cost and business simplification initiatives.
First-quarter reported net earnings were $1.0bn, up 41% from last year. Diluted EPS, excluding asset impairment, exit, and implementation costs and the resolution of a tax audit, increased by 2.3% to $0.45.
First-quarter net revenues rose by 0.8% to $8.1bn, on the back of an organic net revenue gain of 3.6%. The first-quarter revenue figures included a negative 1.6 percentage point impact from divestitures, Kraft said, and a positive foreign exchange impact of 1.2 percentage points. The group recorded an organic net revenue increase of 3.6%, driven by growth in North America and double-digit gains in Russia, Ukraine, and the Middle East.
“Our year is off to a good start,” said Kraft CEO Roger K. Deromedi. “Our Brand Value propositions strengthened with successful new products, quality enhancements and marketing initiatives. We continued to drive out costs and simplify our business. While input costs and the EU remain challenging, I’m confident that our momentum will continue to build as 2006 progresses.”
On a global sector-by-sector basis, Kraft reported a 1.4% fall in net revenues from cheese and foodservice, but a 6.5% increase in revenues from convenience meals in the first quarter. Net revenues from grocery fell by 12.1% but snack and cereals posted a 7.1% gain in net sales.
Overall net revenues from North America were up 1.6%. North America Cheese & Foodservice net sales fell by 1.4% to $1.47bn, while North America Convenient Meals grew by 6.5% to $1.21bn, driven by continued new product growth, price increases and beneficial changes in product mix. North America Grocery saw net revenues fall by 12.1% to $632m, but North America Snacks & Cereals reported net revenue growth of 7.1% to $1.53bn, on the back of a combination of volume growth, positive changes in product mix and pricing.
Kraft said total sales to the EU were down by 9.1% at $1.47bn but excluding the impact of foreign exchange and divested businesses, sales rose by 0.4%. Net sales to developing markets, Oceania and North Asia rose by 13.6% to $1.01bn, the company said.
The company confirmed its full-year 2006 EPS guidance of between $1.55 and $1.60.