US food giant Kraft has reported a 22% rise in quarterly earnings on lower costs, offsetting a slowdown in shipments as retailers such as Kmart trimmed inventory.

Kraft, which is North America’s largest food company, reported first-quarter net income of US$848m, compared to $693m in the year-ago period.

The company’s revenue was up 3% to $7.36bn. Kraft has raised prices on items such as cookies, cereal and coffee in a bid to offset the rising costs of commodities such as cocoa.

Kraft backed its earlier guidance for 2003 earnings of between $2.10 and $2.15 a share.

The company said the bankruptcies of convenience store operator Kmart and food distributor Fleming had depressed its first-quarter shipments.

“We continue to work with them very closely through their bankruptcy processes and continue to ship products to them under appropriate credit terms,” Kraft executives were quoted by Reuters as saying.