Kraft Foods Group has upped its annual earnings guidance but suggested full-year sales could come in lower than expected after a set of mixed quarterly results from the US firm.
Earnings climbed to US$1.28bn in the six month period ended 29 June, up 18.3% increase on the prior year. Operating profit was up 33.6% to $2.21bn. Profits were boosted by a $604m gain from post-employment benefit plans recorded in the second quarter.
Sales in the period edged up 0.5% to $9.28bn, as organic net revenue fell in the second quarter as volumes dropped.
CEO Tony Vernon, however, said top-line growth in the second quarter was held back by the return discipline it is applying to marketing, promotion and innovation. Sales in the quarter fell 1.1% to $4.74bn. Earnings were up 37.5% to $829m.
Nonetheless, he said Kraft expects to see “profitable growth from a stronger base going forward and greater revenue growth in subsequent quarters as more new initiatives come to market”.
Kraft adjusted its 2013 sales outlook to be “in line with or slightly lower” than the growth of the North American food and beverage market. In May, the Planters snack nuts firm forecast growth in line with the market.
EPS is expected to increase to around $3.40 from $2.75 previously, due to lower anticipated pension costs.
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