US food giant posts second quarter profits rise - Kraft Foods, 2001 - Brief Article - Statistical Data Included

Eurofood, August 2, 2001

Kraft Foods has reported a 13.5% increase in its second quarter profits. Following Kraft's first public offering recently, the results are its first as an independently listed company.

A strong US dollar has hampered Kraft slightly, but earnings at Kraft Foods increased from US$512m (606.2m [European Dollar]) to US$581m. The results assume Kraft had owned Nabisco, which it acquired last December, for all of last year. Excluding the inclusion of Nabisco, Kraft would have seen its earnings decline from US$568m to US$505m, or by 11%. Operating revenue for the second quarter was US$8.69bn, up 25% from US$6.97bn a year earlier.

In North America, which accounts for the majority of Kraft's business, operating revenues increased 1.3% to US$6.52bn. However, lower world coffee prices, higher cheese commodity prices, two of Kraft's most important sectors, as well as intense competition from cereal rivals Kellogg, all affected Kraft in the quarter. Volumes at Kraft's North American division were up 2.8%.

On an international scale, volumes rose 4.9%, following good growth in emerging markets like Central and Eastern Europe, Latin America, and the Asia Pacific region. Again, the strength of the US dollar helped cut an estimated US$24m from operating income at its International unit. Operating revenues fell 5% to US$2.17bn.

For the full year forecast, the US concern warned that currency fluctuations could affect its full-year results by anything between US$80m to US$100m.

Kraft, the largest food company in the US raised some US$8.4bn in an initial public offering last month. Its owners Philip Morris now hold 84% of its stock, and 97.7% of the voting rights.

Kraft also said that it had no immediate major acquisitions in target. Should the takeover of Quaker Oats by compatriot cola giant PepsiCo receive the green light, Kraft could be tempted to make a move for the cereal business, which PepsiCo is likely to off load. The US food concern also said it had no plans for major acquisitions in Europe which could boost profits. Kraft co-chief executive officer told press "Our focus is to grow our major core brands", with organic growth a high priority.

Kraft representatives also said that more Nabisco units would be sold during the remainder of the year. Some Nabisco units have already been sold to clear competition regulations.