Kraft Posts Earnings Increase Following Price Rise

30 July 2008

NORTHFIELD, Illinois: Kraft Foods, America's biggest food manufacturer, has raised its full-year earnings and sales predictions after reporting an increase in second quarter profits, despite the rising cost of commodities.

The company posted a 3.5% increase in net earnings to $732 million (€465m; £367m) in Q2, and now estimates that organic revenue growth for the year will reach 6% (up 1% on the previous forecast).  

Price increases were said to have mitigated the effects of the growing cost of commodities, and helped reverse a 13.4% fall in earnings from the first quarter, which itself partly resulted from the company not passing on price rises to consumers.

Chief executive Irene Rosenfeld argued that the food giant was able to reclaim market share in Q2 as competitors were also forced to put up prices.

She said: “Everyone is dealing with the same input costs and I think they are all coming to understand that this isn't going to go away anytime soon.” 

As Kraft's operations include cereals, diary and meat, it estimates that costs will increase by $2 billion (or 13%) over the course of the year, and that it will increase prices by some 7%. 

Data sourced from Financial Times; additional content by WARC staff