US food giant Kraft Foods has reported a rise in quarterly profit that was narrower than expected as retailers cut inventory and major food categories saw sluggish growth amid a slow US economy.
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Kraft, which makes Ritz biscuits and Oreo cookies, reported second-quarter earnings of US$949m, or 55 cents a share, compared to $901m, or 52 cents a share, in the year-ago period. Analysts polled by Reuters Research had expected earnings of 58 cents a share.
The company’s second-quarter sales rose 4.4% to $7.84bn. Net revenue from Kraft’s North American unit rose 1.4% to $5.64bn, while international sales rose 13% to $2.20bn, partly due to price increases and foreign exchange rates.
Kraft said it planned to increase promotional and advertising spending by more than $200m in the second half of 2003. Some of this spending is to be put towards price promotions, in order to win back customers who are opting for cheaper goods in the current economic climate.
“We believe for the best long-term health of the business, we need to invest to get pricing in line and to increase marketing support,” Kraft co-chief executive Betsy Holden told Reuters in an interview.
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By GlobalDataHolden also said the company has seen a slowdown in shipments, partly due to store closures by Kmart and Fleming.
Kraft said it now expects 2003 profit of $2.00 to $2.05 per share, compared to an April forecast of $2.10 to $2.15 per share.
