Kraft Foods Inc. reported earnings that topped analysts' estimates and said full-year profit may be higher than it forecast after increasing cheese, chocolate, and Planters peanut prices to cover rising energy and grain costs.
Profit also benefited on a gain from commodities hedging and the decline in the dollar overseas, Kraft said.
Net income rose for the first time in four quarters after Kraft boosted prices on 90 percent of its foods and beverages and shipments fell less than the company expected. Chief executive Irene Rosenfeld ordered additional price increases and said single-serve pizza, hormone-free cheeses, and other new items will minimize the loss of customers who are seeking less expensive brands.
Second-quarter net income advanced 3.5 percent to $732 million, or 48 cents a share, from $707 million, or 44 cents, a year earlier. Excluding items, profit beat analysts' estimates by 8 cents. Revenue rose 21 percent to $11.2 billion from $9.21 billion, Kraft said in a statement.
The food maker, whose largest shareholder is Warren Buffett's Berkshire Hathaway Inc., expects to earn at least $1.92 a share in 2008 excluding costs, 2 cents higher than its previous forecast and matching analysts' estimates.
Sales excluding acquisitions and divestitures may increase at least 6 percent this year on the higher prices, faster than the previous forecast of at least 5 percent, Kraft said.
Excluding some items, Kraft earned 58 cents a share. Profit was helped by the $150 million hedging gain, or 6 cents, as Kraft locked in prices on the commodities markets to lessen the effect of volatile prices. Foreign currency benefits added 3 cents.
Fifteen analysts surveyed by Bloomberg estimated average profit of 50 cents excluding costs. (Bloomberg)