Cadbury Acquisition Drives Profit at Kraft Foods
The acquisition of Cadbury has helped Kraft Foods to report higher than expected second quarter profit despite a decline in its North American sales. Cadbury contributed 91% of the 25% rise in the US-based food and beverage giant’s net revenues to $12.3b during the quarter.
Kraft Foods’ operating income increased 16.8% to $1.70b, including a favourable impact of 17.8 percentage points from Cadbury’s operations, partially offset by a negative 11.0 percentage point impact from integration program and acquisition-related costs.
Irene Rosenfeld, chairman and chief executive of Kraft Foods.
“We delivered strong earnings in the quarter and the first half of the year, despite difficult conditions in many markets that tempered top-line growth,” says Irene Rosenfeld, chairman and chief executive of Kraft Foods. “We’re making excellent progress on the Cadbury integration and expect to realise even greater synergies. In light of our strong earnings momentum, we will reinvest our 2010 upside to build our brands and to harmonise business practices. We will deliver at least $2.00 of operating EPS this year while building a stronger foundation to achieve top-tier growth in 2011.”
Kraft Foods has increased its estimate of total cost synergies expected from the integration of Cadbury from $675m to at least $750m and has accordingly adjusted the total costs of the integration programme from approximately $1.3b to $1.5b.
