Kraft hit by Cadbury and commodities

Marion Dakers
KRAFT FOODS saw its quarterly income drop 24 per cent on last year as the cost of taking over UK confectioner Cadbury began to bite.

Net income at the owner of Oreo cookies and Philadelphia cheese fell to $540m (£335.5m) from $710m a year ago, in part due to costs linked to Cadbury and to the rising price of corn, sugar and cocoa.

Revenues rose 30 per cent to $13.8bn, slightly ahead of consensus estimates, including a 26.2 percentage point gain from acquiring Cadbury in a controversial deal last February.

Cadbury fared badly in North America in the fourth quarter, with net revenues dropping 6.1 per cent after lower sales of Trident and Stride chewing gum.

Cadbury turnover in Europe was flat, with a decline in southern Europe offsetting what Kraft said were strong sales in the UK.

Operating income in Europe fell 27.7 per cent to $159m, as costs linked to integrating Cadbury wiped out half of the division’s profit.

In emerging markets, where Kraft hopes to grow through its takeover of Cadbury, the group saw revenues rise 73.5 per cent with 61 percentage points coming through Cadbury.

Kraft forecast profit growth of between 11 and 13 per cent excluding integration costs this year, which has been scaled back from predictions of “mid-teens” growth in November’s update.