Kraft Foods Grp (KRFT) Tops Q1 EPS by 9c

Kraft Foods Grp (NASDAQ: KRFT) reported Q1 EPS of $0.85, $0.09 better than the analyst estimate of $0.76. Revenue for the quarter came in at $4.4 billion versus the consensus estimate of $4.45 billion.

FIRST QUARTER BUSINESS SEGMENT HIGHLIGHTS

Cheese:

• Net revenues of $1 billion increased from the prior year primarily due to price increases that more than offset a volume/mix decline caused by later Easter-related shipments versus the prior year.
• Operating income growth reflected lower spending on cost savings initiatives and favorable pricing net of commodity cost increases that were partially offset by unfavorable manufacturing costs, lower volumes and higher marketing expense versus the prior year.

Refrigerated Meals:

• Net revenues of $816 million were flat versus the prior year as continued momentum in Lunchables offset volume softness in cold cuts and bacon due to the shift in Easter-related shipments and retail customer inventory reductions versus year-end levels.
• Operating income was flat as higher marketing spending versus the prior year were offset by lower spending on cost savings initiatives.

Beverages:

• Net revenues of $674 million declined primarily due to lower pricing reflecting lower green coffee costs versus last year as well as increased merchandising activity behind Capri Sun ready-to-drink beverages.
• Operating income growth was driven by lower spending on cost savings initiatives and productivity gains that more than offset an increase in marketing spending and unfavorable volume/mix versus the prior year.

Meals & Desserts:

• Net revenues of $498 million were down from last year due to a combination of the shift in Easter-related shipments, retail customer inventory reductions versus year-end levels and continued weakness in ready-to-eat JELL-O desserts.
• Operating income declined significantly as a combination of unfavorable volume/mix and higher marketing spending more than offset the benefit of lower spending on cost savings initiatives versus the prior year.

Enhancers & Snack Nuts:

• Net revenues of $503 million were lower, primarily driven by comparisons with Easter-related shipments in the prior year as well as a reduction in retail customer inventory levels during the first quarter this year.
• Operating income declined reflecting higher marketing spending that more than offset lower spending on cost savings initiatives and productivity gains.

Canada:

• Net revenues of $427 million declined versus last year primarily due to a combination of an unfavorable currency impact, comparisons with Easter-related shipments in the prior year and retail customer inventory reductions versus year-end levels.
• Operating income declined as lower volume/mix and the unfavorable currency impact more than offset productivity gains.

Other Businesses:

• Net revenues of $437 million were slightly lower than the prior year as the exit of certain product lines in the company's Foodservice business led to lower volumes. This impact was partially offset by price increases to offset higher commodity costs.
• Strong double-digit growth in operating income was driven by lower spending on cost savings initiatives and productivity gains that more than offset the impact of the volume/mix decline.

For earnings history and earnings-related data on Kraft Foods Grp (KRFT) click here.

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