News Column

Kraft posts better-than-expected profit

May 1, 2014

By Jessica Wohl, Chicago Tribune

May 01--Kraft Foods Group Inc. posted a higher-than-expected first-quarter profit despite a dip in sales due to holiday timing.

Kraft continued to make steady progress during the quarter and still has "more work to do," CEO Tony Vernon said in a statement.

Shares of Kraft, the maker of Oscar Mayer meats and Philadelphia cream cheese, rose 11 cents to $56.80 in after-hours trading following the company's report.

Northfield-based Kraft earned $513 million, or 85 cents per share, in the first quarter ended on March 29, up from $456 million, or 76 cents per share, a year earlier. The company said it earned about 78 cents per share excluding the benefit of certain financial items.

Revenue fell 3.3 percent to $4.36 billion. Sales of cheese, the company's biggest category, were boosted by higher prices.

Sales of refrigerated meals were flat, with strong sales of Lunchables and weakness in cold cuts and bacon.

Beverage revenue declined as the company lowered prices due to lower coffee costs and spent more to promote its Capri Sun drinks. In the meals and desserts category, Kraft said revenue was down and that ready-to-eat Jell-O desserts still are not doing too well.

Analysts, on average, had expected Kraft to earn 76 cents per share on $4.45 billion in revenue.

Vernon previously said that he thought retailers had more inventory on hand than they typically carry, and therefore could opt to order less. At the same time, some of the orders the company filled during the first quarter of last year, tied to the timing of Easter, moved into the second quarter of this year. The holiday fell on April 20 this year; it was on March 31 in 2013.

Shares of Kraft fell slightly in after-hours trading following the company's report.

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Source: Chicago Tribune (IL)

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