US food giant Kraft Foods has reported a 3.8% slide in third-quarter profit, as higher revenues were offset by increased costs.
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The company reported net earnings of US$779m, or 46 cents per share, for the third quarter to 30 September, compared to $810m, or 47 cents per share, in the year-ago period. Kraft said the positive impacts of the company’s Sustainable Growth Plan on revenue growth, restructuring savings and a favourable tax rate were more than offset by higher commodity costs and the costs to implement the Sustainable Growth Plan.
Kraft’s net revenues rose 4.7% to $7.83bn, driven by new products, the impact of increased marketing spending, currency, and commodity-driven pricing.
The company narrowed its 2004 full year earnings per share guidance range to $1.56 to $1.60.
“In the US, new products are gaining traction and increased marketing spending is having its intended effect. We continued our first half momentum in key businesses like cheese and meat, while improving the growth trends in biscuits and pizza. Internationally, revenues also increased, although the improvement was less than anticipated, and we continued to face challenges in the retail and competitive environments in a few key markets, especially France,” said CEO Roger Deromedi.
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By GlobalDataThe company said commodity costs were up approximately $225m in the quarter, with dairy costs representing the most significant increase due to record high cheese markets in the second quarter. Additionally, in the third quarter, coffee, meat, energy and packaging costs all increased significantly versus last year.
