The 3-year turnaround strategy is working. CEO Irene Rosenfeld said "the company's restructuring program is yielding savings, lowering manufacturing costs and improving its product mix."
I'm afraid it's not a scam, it's deliberate and lasting changes that bring costs down. These low costs are here to stay, meaning that when volume increases as the economy gets better, Kraft will see big increases in profit.
One key aspect of the 'restructuring' programme is cost-input inflation. Continued declines in input cost will be beneficial regardless of the state of the economy. Indeed, a weak rebound will be a boon to Kraft, rather than a brisk snap-back: In a weak economy, consumers will continue to eat at home, and select Kraft products in the grocery aisle -- a boom economy, and they dine out more often, and pad Chili's bottom line instead!
Yes, this was a very good report. Organic revenues were even up. Net revenues were down only because of currency fluctuations.
With a major economic downturn, quality companies with quality brands benefit. Survival of the fittest. Plus, they get more efficient. These kind of layoffs and cost containment actions are what good companies do in downturns.
To top it off, KFT is projecting improved results for the future.