Kraft reports mixed third quarter results
modest 2.3 per cent, with ongoing streamlining costs impacting
results.
The company's net revenues grew 2.3 per cent in the third quarter to $8.2bn (€6.5bn). This excludes a negative 1.4 percentage point impact from divestitures and a favourable currency impact of 1.5 percentage points. Organic net revenue growth was 2.2 per cent.
"Our third quarter results were mixed. Our restructuring efforts have enabled us to fund a number of successful initiatives in some key growth areas, including 'better-for-you' products, snacking and convenient meals," said Irene Rosenfield, chief exectutive officer.
Kraft experienced $148m (€120m) in writeoffs and costs incurred, primarily relating to ongoing streamlining efforts. It made a gain of $251m (€200m) on redemption of its interest in United Biscuits and a loss of $3m (€2.4m) on the divesture of the pets snacks brands and assets.
This contrasts against the same period 2005 where Kraft lost $42 million (€33m) in writeoffs and costs.
"While income growth was strong, our aggregate top-line growth is not where it needs to be. We must continue to invest to build our momentum and generate growth more broadly," said Rosenfield.
The third quarter reported net earnings were $748m (€600m), an increase of 11 per cent versus last year.
Kraft is continuing its restructuring program. By the end of the third quarter annualised ongoing savings for the programme totaled approximately $465m (€363), up from about $260m (€207) at the end of 2005.
The company expects restructuring and impairment charges will total $1bn in 2006, but now expects cumulative savings will reach $530m (€422) by the end of 2006, which is down from a previous expectation of $560m (€366) due t the timing of activities.
On a geographical basis, the company reported its net revenues in the EU grew by 3 per cent to $1.54bn. Organic net revenue growth decreased 1.1 per cent as small gains in chocolate and coffee were offset by declines in groceries and cheese.
In North America Kraft reported strong growth in convenience meal sales of 5.1 per cent to $123bn with organic net revenue of 4.7 per cent.
Snacks and Cereals also experienced growth at 1.8 per cent to $1.59bn. However this was gain offset by decline in both cheese and groceries which were down 0.9 per cent and 7.6 per cent respectively.
