Coffee stirs Kraft to strong financial performance
The firm announced a 16.1% increase in net revenue to £1.9bn compared with £1.67bn the previous year. Organic net revenues also rose 5.2% to £1.7bn. These figures were a result of increased prices on many products this year, which was a response to higher costs for ingredients such as corn, coffee and sugar.
Segment operating income remained flat, while integration programme costs cut growth by 17.2%. These results were partly offset by a positive 10.9% point impact from currency.
Excluding these factors, growth in segment operating income reflected volume/mix gains and lower overheads. This more than offset higher input costs net of pricing, the firm said in its third quarter results statement for the period ending September 30.
Kraft also cited an “on-going focus on Power Brands and cost management” as a reason for the healthy figures in the region.
Controversial
Globally, the firm, which bought Cadbury’s in a controversial £11.6bn deal last year, reported third quarter profits ahead of analysts expectations.
Kraft saw revenues rise 11.5% to £8.3bn for the period. Profits also rose 6.8% to £2.8bn. Operating income was £1.06bn with a margin of 12.8%.
The firm said that these figures were partially affected by “a negative impact” from rivals Starbucks as well as the timing of selling, general and administrative expenses.
However as a result of its performance, the firm has raised its 2011 revenue forecast by at least 6%.
Chairman and ceo, Irene Rosenfield said: “Our investments in marketing and new products continue to drive high quality growth and solid market shares. And we've accomplished this despite having taken significant price increases to offset record-high input costs".
"Together with substantial savings opportunities, we expect to deliver top-tier results in 2011 and remain on track to launch two industry-leading companies with strong operating momentum in the coming year.”
Price increases
Meanwhile, last week Kraft committed to further investment at its Bournville Global Centre of Excellence for Chocolate R&D in Birmingham after meeting with a team of delegates, including representatives from Birmingham Council.
Kraft executives, including Rosenfield, met the representatives who discussed the future of Bournville on Wednesday, October 27. This followed the news that the firm would be creating up to 54 new R&D jobs in the Birmingham area.
Following the meeting, councillor Mike Whitby of Birmingham Council said the discussions had been “very encouraging” and he expressed his “delight” at the firm’s commitment to the centre.
He said: “Kraft Foods is a major global player and we are proud to have it investing in our city and in our people. We will be working together to ensure the long-term prosperity of the Cadbury brand and the Birmingham community.”
