By Maria Armental
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 Northfiled, Ill., company, which was spun off in 2012 from
Mondel z 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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