Kraft Foods Inc.'s profit fell in the first quarter as sales
edged down despite the packaged-food giant's price increases last
year.
Kraft--home to supermarket mainstay brands such as Oscar Mayer,
Maxwell House, and Velveeta--last year raised prices on some
products, such as cheese and ground coffee, to offset higher
commodities costs.
The Northfield, Ill., company, which was spun off in 2012 from
Mondelez International Inc., is now merging with H.J. Heinz Co.
The merger is expected to close in the second half of 2015 and
would create the third-largest food and beverage company in North
America, with about $28 billion in revenue, and is expected to
result in about $1.5 billion in annual savings by the end of
2017.
For the most recent period, Kraft reported net profit of $429
million, or 72 cents a share, down from $513 million, or 85 cents a
share, a year earlier. The latest period included a 14-cent-a-share
impact tied to benefit plans, cost-cutting initiatives and the
pending merger with Heinz.
Revenue edged down 0.2% to $4.35 billion. Organic net
revenue--which excludes the impact of transactions with Mondel z,
acquisitions, divestitures and currency impacts--rose 1.1%.
Analysts surveyed by Thomson Reuters expected a profit of 81
cents and revenue of $4.43 billion.
Revenue at the beverages segment rose 4.2% to $702 million,
benefiting from higher prices and the recent launch of McCafé
coffee, while operating income fell 6% on higher commodity
costs.
Cheese segment revenue rose 1.3% to $1.02 billion, benefiting
from the higher prices and timing of Easter-related shipments along
with higher sales of last year's relaunched Philadelphia soft cream
cheese to remove artificial ingredients. Operating income rose
nearly 20%, largely due to the higher prices offsetting input
costs.
Refrigerated-meals business revenue improved 2.1% to $833
million, while operating income improved 1%.
Revenue at the meals and desserts unit fell 2% to $488 million,
reflecting market share losses in desserts despite higher marketing
expenses, while operating income decreased 7%.
Write to Maria Armental at maria.armental@wsj.com
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