Kraft Foods off to a strong start in 2011

Snacks giant, Kraft Foods, has experienced a strong growth in the first quarter of 2011, with net revenues up 11 per cent, reaching $12.6 billion.

The company said the growth was driven by continued investments in marketing and innovation combined with aggressive cost management.

"We’re off to a stronger-than-anticipated start to the year as our teams around the world execute our growth strategy," said Irene Rosenfeld, Chairman and CEO of Kraft Foods.

"Our business fundamentals are solid, and we continue to benefit from brand-building investments which allowed us to successfully deliver net pricing to offset commodities increases and drive top-tier growth. At the same time, we’re generating cost savings to reinvest in further growth and expand margins."

The company’s organic net revenues grew 4.6 percent, driven by solid growth in all regions. Pricing, which accounted for 3.7 percentage points of growth, was higher in each geographic region. The shift of Easter-related shipments into the second quarter tempered growth by approximately 1.5 percentage points.

Operating income was $1.6 billion, and operating income margin was 13.1 percent. Underlying Operating Income (1), which excludes acquisition-related (2) and Integration Program (3) costs, increased 16 per cent to $1.8 billion.

"First quarter results bolster our confidence in our 2011 outlook," said Tim McLevish, Executive Vice President and CFO. "We’re realizing better alignment between pricing and input costs, and volumes to date have held up well.

"At the same time, raw material costs continue to escalate and the economic environment remains unsettled. Our updated earnings guidance reflects this strong business momentum, consistent with our previous guidance of 11 to 13 percent Operating EPS (Earnings Per Share) growth, while recognizing recent changes in the US premium coffee business.”

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