Kraft reported strong fourth-quarter 2014 results beating the Zacks
Consensus Estimate for both earnings and sales as volumes improved.
However, strong fourth quarter results were overshadowed by the
announcement of the departure of its chief operating officer (COO)
and two other executive officers Though some positive developments
aided the fourth-quarter top line, Kraft's overall performance was
below expectations in 2014. Price increases to cover rising
commodity costs and softness in certain categories due to the lack
of innovation/brand building activities hurt sales in the year.
Kraft's organic sales growth lagged market expectations in 2014 and
we do not expect it to improve much in 2015. In addition, rising
food costs, increasing competitive pressures and challenging
industry conditions concern us. However, Kraft's strong brand
portfolio, successful innovation, aggressive cost reduction and
efficiency-improvement initiatives keep our faith in the stock.
Headquartered in Northfield, IL, Kraft Foods Group, Inc. (KRFT)
is one of the largest consumer packaged food and beverage companies
in North America. It sells branded products in beverages, cheese,
coffee, refrigerated meals and grocery categories, mainly across
the U.S. and Canada. Some of its popular brands include Kraft,
Maxwell House, Oscar Mayer, Planters and JELL-O.
Kraft Foods Group was spun off from Mondelez International into
a separate independent company on Oct 1, 2012, and consists of the
North American grocery business of the old Kraft Foods.
Kraft's reportable segments are Beverages, Cheese, Refrigerated
Meals, Meals & Desserts, Enhancers & Snack Nuts, and
Canada. The remaining businesses including Foodservice and other
international businesses are clubbed under "Other Businesses".
Management's long-term growth targets include organic sales
growth at or above market growth of the North American food and
beverage industry, mid single-digit operating income growth and
mid-to-high single-digit earnings growth.
Kraft Foods Group Inc. (KRFT): Read the Full
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