Kraft Foods Spikes on Earnings, Cheese Sales

Michael Teague  |

The recently spun-off company Kraft Foods Group, Inc. (KRFT) reported earnings late on Thursday that showed the maker of the perennial children’s staple macaroni & cheese, and the equally popular adult staple Maxwell House Coffee bringing in a first quarter profit of $456 million, or $0.76 per share on revenue of $4.5 billion.

While down from the prior year period, during which the company netted $483 million, or $0.82 per share, Kraft topped EPS expectations of $0.64 per share on revenue of $4.48 billion.  The earnings-per-share figure in particular was all the more impressive considering that the first quarter of 2013 included a total of $0.25 per share in combined restructuring charges ($120 million) and interest expenses.

Kraft’s performance in the first quarter was buttressed by revenue gains from drink and refrigerated meals sales, with particularly strong showings from Kool-Aid and Capri Sun, as well as a nearly 7 percent increase in revenues from cheese sales, the result of greater demand for the company’s natural cheese products as well as its Velveeta sliced cheese.

The company also announced plans to invest $25 million throughout the year on developing and advertising new products.  According to CEO Tony Vernon, the Q1 results “reflect strong returns on our new product innovations to date.”

Kraft Foods stood by its own forecasts for the rest of 2013, expecting earnings for the full year to come it at approximately $2.75 per share, a number that factors-in additional restructuring costs of $300 million, or $0.33 per share.  Overall, the company has benefitted from efforts to cut costs and ramp up efficiency since 2012.

Investors were more than happy with the results, evidenced by the 5.27 percent jump in share price to $53.19, after reaching an intraday and all-time high of $54.10.



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