Kraft Foods Group Inc. soundly beat analyst expectations during its first quarter reporting earnings as a standalone company, citing strong new product sales, increased advertising investment and improved productivity for the gains.
For the quarter ended Sept. 30, net income rose 12.7 percent to $470 million, or 79 cents per share, from $417 million, or 71 cents per share.
Analysts had expected 65 cents per share, according to Bloomberg. The company's comparisons were created by carving out date from the previous Kraft Foods.
"We believe we've laid a solid foundation for the future of our $19 billion startup," Kraft CEO Tony Vernon said in a call with investors. "By the numbers we liked what we saw on both top and bottom lines."
The Northfield-based maker of Maxwell House coffee, Philadelphia Cream Cheese and Oscar Mayer meats broke off from Kraft Foods last month as a $19 billion North American grocery company. The remainder of the former Kraft is now called Mondelez International, with products like Oreo, Ritz and Toblerone.
Sales for the quarter were up 3 percent to $4.6 billion. Analysts had been expecting $4.55 billion.
Management reaffirmed full-year 2013 earnings guidance of $2.60, but said it's too soon to offer fourth-quarter guidance for 2012. The company warned that fourth-quarter sales are likely to be flat or down due to tough comparisons from a year ago, store inventories that were stocked up during the third quarter, and discontinued businesses.
During the call, Vernon highlighted strong performances from the company's cheese business, with nine consecutive quarters of growth, its cold cut business, and brands that have benefited from innovation and stepped-up marketing, like Lunchables, Velveeta and Kool-Aid.
However, he said a number of the company's brands, Maxwell House, Planters and Jell-O among them, aren't performing up to scratch, and are about to undergo significant overhauls.
"Jell-O must be revitalized and we must do it in the face of yogurt's explosive growth and Planters needs significantly more work to re-establish category leadership and profitable growth," Vernon said, adding that these are "just to name a few of our bigger projects."
In establishing North America's fourth-largest food and beverage company, behind PepsiCo, Nestle and Coca-Cola, Vernon has inherited a number of storied but relatively antiquated brand names like Stove Top, Cool Whip and Shake N' Bake. Much of the company's future success hinges on its ability to re-energize these brands, or sell them.
Vernon said the company is "only in the early innings," and there is "much work ahead to make cash king in the new Kraft."
Stock rose 1 percent to $45.28 in pre-market trading.
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