Kraft has increased its full-year earnings per share guidance on the back of the success of its growth plan, lower than expected taxes and its share buyback programme.
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Speaking at a conference today, chairman and CEO Irene Rosenfeld said Kraft has raised its guidance on full-year diluted EPS to $1.60 to $1.62 on a reported basis, from a previous range of $1.55 to $1.60. The company increased guidance on diluted EPS, excluding items affecting comparability, to $1.80 to $1.82 from a previous range of $1.75 to $1.80.
“We’re making good progress on the four strategies that will help return Kraft to reliable growth…and our investments are beginning to pay off in stronger top-line momentum,” Rosenfeld told the investor community.
Rosenfeld said that the company is spending an incremental $300-$400m in 2007 on product quality improvements, new products and increased marketing. Kraft expects to spend at the high end of this range, with the bulk of its investment coming in the second half of the year.
“We’re spending on programmes to accelerate our revenue growth as quickly as possible, deliver sequential improvement in our market share performance and set the stage for improved profit margins beginning in 2008,” Rosenfeld said. “Our key 2007 initiatives are driving organic growth in every geography. We’re stepping-up growth in North America, changing the growth trajectory of the EU after years of decline and maintaining our momentum in developing markets.”
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By GlobalDataIn North America, the company is focusing its incremental investments on five large, highly profitable categories – macaroni & cheese, pizza, biscuits, cheese and coffee – where Kraft has brands with strong relative market share positions.
In the European Union, the company is taking a back-to-basics approach to building its core brands, particularly in its large chocolate and coffee categories. And, in developing markets, Kraft is coupling this back-to-basics approach with expanded distribution in traditional trade channels in key markets.
In addition, Rosenfeld said that Kraft’s top 120 leaders are implementing a new structure built on three core elements: accountable business units; shared services that leverage the scale of the company’s global portfolio; and a streamlined corporate staff.
Kraft expects to complete the roll-out of this new structure by early 2008. The primary objective of this initiative is improved effectiveness. However, as the company streamlines its headquarters locations, there will be some job eliminations, the CEO warned.
Last month, the company raised its organic net revenue growth expectation for the year to 4%-plus.
Rosenfeld also reported that the company remains on track to deliver $1 billion in savings from its total $3 billion, multi-year restructuring programme.
