PORTLAND, Ore. (AP) — Kraft Foods Inc. reported Thursday that its second-quarter profit jumped more than 5 percent as higher prices helped offset the drag of raw-materials costs and currency exchange rates. The food company stood by its full-year outlook.
Many U.S. exporters are feeling the impact of a stronger dollar as sales made overseas translate to fewer greenbacks at home. And food makers are still dealing with rising costs for their ingredients. Kraft and others have raised prices to offset those pressures but it has taken some time to roll out all the increases.
"We delivered a very solid performance in a difficult environment and I believe we are on track to achieve our goals for the year," CEO Irene Rosenfeld said.
Kraft earned $1.03 billion, or 58 cents per share, for the quarter that ended June 30. That's up from $976 million, or 55 cents per share, earned last year. After adjusting for spin-off and other one-time costs, it earned 68 cents per share versus 62 cents. That's above the 66 cents a share analysts polled by FactSet had anticipated.
Revenue fell 4 percent to $13.29 billion for the period, below the $13.29 billion expected by analysts.
Kraft said its revenue was hurt by unfavorable currency exchange rates and the impact of an accounting calendar change in the prior year. Its Easter products shipped in the first quarter this year and it pruned the number of products it sold in North America, which both hurt its revenue.
The company is also coping with the global economic pressures on consumers. It sold more Triscuits and Honey Maid graham crackers in the U.S. and more Oreos and Tassimo coffee internationally. But it still is feeling the pinch as gum and candy sales in France, Spain and Greece suffered during the period due to the pressures of the European economic crisis on teenagers there.
Still, Kraft said its first-half of the year came in on track. It stood by its previous forecast for the year of organic revenue growth, which excludes contributions from acquisitions, of 5 percent and organic earnings per share growth of 9 percent on a constant-currency basis.
Thursday's was one of the food company's final earnings reports before it splits in two.
Kraft announced plans last year to divide its business into two independent parts: an international snacks business and a North American grocery business. It said Thursday that it expects to complete the spinoff of the grocery business on Oct. 1.
The company also said that it has completed its leadership teams for both companies. It announced board of directors for both companies and said it has appointed a Bain & Co. partner Tracey Belcourt as executive vice president of strategy for the snacks company, Mondelez International Inc.
The spinoff still needs final approval from the board of directors and is subject to a Canadian tax ruling but is generally expected to move forward as planned.
Shares of Northfield, Ill.-based Kraft rose 48 cents, or 1.2 percent, to $39.42 in after-hours trading on the earnings news. Its shares fell 45 cents to close the regular trading session at $38.94.