Kraft Foods Group Inc on Thursday reported higher income and raised its earnings outlook for the year, but missed Wall Street's revenue estimates, citing lower prices and an unseasonably early Easter holiday. Kraft CEO Tony Vernon said seasonal headwinds were "no excuse" for Kraft's 1.1 percent second-quarter decline in revenues.
Strong cheese and dairy sales and increased spending on advertising for products like Jell-O and Planter's Nuts will help lift sales through the end of the year, Vernon said. Revenue in 2013 may nonetheless "trail the North American food and beverage growth", said CFO Tim McLevish.
Kraft's adjusted 2013 outlook expects growth to be in line with or slightly lower than the growth of the North American food and beverage market overall. Earnings per share are now expected to rise to about $3.40 from $2.75 per share for 2013, largely because of lower anticipated pension costs. Net income for the US snack and beverage company rose to $829 million, or $1.38 per share, in the second quarter, up from $603 million, or $1.02 per share, a year earlier.
Earnings per share for the quarter include 9 cents in restructuring costs and a 62 cent non-cash benefit that arose when the company re-evaluated its obligations to two of its major pension plans and found they were lower than previously expected. Excluding these items, the company said earnings per share for the quarter came to 76 cents. Analysts expected earnings per share of 66 cents, according to Thomson Reuters I/B/E/S.
Net revenue fell to $4.74 billion from $4.79 billion in the second quarter of 2012. Analysts expected earnings of $4.81 billion, according to Thomson Reuters I/B/E/S. The company's cheese business grew 5 percent in the quarter to $945 million because of strong sales of Velveeta dinners and natural cheese, while Kraft's beverage revenues fell 3.2 percent to $753 million, mostly because of lower coffee prices.
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