US food giant Kraft Foods has reported a 34% drop in first-quarter net profit, due to restructuring charges and increased marketing investment.
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The company, whose brands include Kraft cheese, Nabisco cookies and Oscar Mayer meats, posted net earnings of US$560m, or 33 cents per share, for the first quarter to 31 March, compared to $848m, or 49 cents per share, in the year-ago period. Net revenues rose 4.5% to $7.69bn, compared to $7.36bn a year earlier.
The company said it expects full-year earnings per share to be at the lower end of its guidance range of $1.63 to $1.70 per share, due primarily to commodity costs that were higher than originally anticipated.
“As expected, the company’s first quarter earnings were down versus prior year due to restructuring charges, increased marketing investment and higher benefit costs,” said Jim Dollive, chief financial officer of Kraft Foods.
“Costs of many commodities surged during the quarter, most notably US cheese costs, which reached historical highs. These higher costs are expected to be a key challenge for both Kraft and the food industry,” Dollive added.
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