Kraft reported mixed third quarter 2014 results beating the Zacks
Consensus Estimate for earnings but missing the same for revenues
as price increases to sustain rising commodity costs, mainly dairy
and meat, hit sales volumes. Adjusted earnings of $0.78 rose 22%
year over year as lower advertising costs, productivity gains and a
lower tax rate made up for flat top line growth. In fact, Kraft's
top line has been soft ever since the split from Mondelez due to
broader macro pressures. Several of its product categories have
been sluggish due to consumption weakness and stiff competition.
Kraft's organic sales growth lagged market expectations so far this
year and is expected to continue in the fourth quarter. In
addition, rising food costs, increasing competitive pressures and
challenging industry conditions concern us. However, Kraft's strong
brand portfolio, 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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