Kraft Foods Inc reported fourth quarter earnings that were in line with analysts’ expectations. It also forecast a 9 percent growth in earnings during 2012, even though it restructures its brand portfolio to eliminate some products.
Quarterly net earnings were $830 million (47 cents a share), much better than the previous year’s $540 million (31 cents a share). Earnings were 57 cents a share excluding items, which was in line with what analysts’ expected as per Thomson Reuters I/B/E/S. Revenues for the quarter at $14.7 billion were higher by 6.6 percent.
Kraft plans to split into two companies during 2012 – snack items such as Cadbury chocolate and Oreo cookies will go to one company while the other will focus on grocery brands such as Maxwell House coffee and Oscar Mayer lunch meat.
Product rationalization will cost Kraft a percentage point in its growth outlook for this year – it expects net revenue growth of 5 percent. Net earnings, however, are expected to grow by 9 percent on a constant currency basis, even though it expects higher taxes and pension costs. One-time costs of splitting the company could range from $1.6 billion to $1.8 billion, plus additional fees of $400 million to $800 million payable on the transfer of debt to the company taking over the grocery brands.
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