Kraft Sets Spin-Off Date; Names Boards, Strategy Exec

by Karlene Lukovitz, Aug 3, 2012, 7:31 AM

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In conjunction with reporting its Q2 financials, Kraft Foods Inc. yesterday announced that it expects its split into two companies to take place on October 1. 

The company also announced the members of the boards of directors for the newly independent companies, and the hire of Tracey Belcourt as EVP, strategy for the new global snacks business, Mondelez International.

Spin-Off Logistics

The company expects the spin-off of its North American grocery business, Kraft Foods Group, Inc., to shareholders to occur at 5 p.m. EDT on Oct. 1, assuming approval by the Kraft Foods Inc. board.

At the time of the spin-off, each shareholder entitled to receive shares of Kraft Foods Group will receive one share of that company for every three shares of Kraft Foods Inc.  The common stock for both companies is expected to begin trading on a "when-issued" basis shortly before the record date, which is expected to be in mid-September.

Starting Oct. 2, Kraft Foods Group will begin trading on the NASDAQ Global Select Market under the ticker symbol KRFT. Kraft Foods Inc. will change its name to Mondelez International, Inc. and change its ticker symbol to MDLZ  (retiring the current KFT ticker symbol).  

Kraft Foods Group and Mondelez will hold investor events in early September.

The directors named for each of the newly independent companies’ boards (nine for Mondelez, 11 for Krafts Foods Group) include several executives who are current Kraft Foods Inc. directors. 

As previously announced, Irene Rosenfeld, chairman/CEO of Kraft Foods Inc., will serve in the same positions for the new global snacks company. John Cahill and Tony Vernon will respectively serve as executive chairman and CEO of Kraft Foods Group.

At Mondelez, Belcourt, who has been a partner at Bain & Co. in Toronto since 1999, will lead the strategy function and M&A activities.

Q2 Results

For the second quarter, Kraft Foods Inc. reported diluted EPS of $0.58 and a 4.3% decline in net revenue, to $13.3 billion. The revenue decline was attributed to unfavorable currency exchange trends and the benefit of accounting calendar changes  in 2011’s Q2. 

Operating EPS rose 9.7%, to $0.68. Organic net revenue grew 3.4%, driven by nearly 6% growth from Kraft’s “power brands.” 

Thompson Reuters’ projections had been $0.66 EPS and $13.96 billion in sales.

In North America, Q2 net revenue grew 1.2%, organic net revenue increased 1.7%, and operating income grew 3.1%. Kraft attributed the sales gains to the power brands, new products and continued benefit from earlier price increases.

For the first half, net revenue fell 0.3%, while organic net revenue grew 4.9%. Diluted EPS was $1.03; operating EPS grew 9.6%, to $1.25. 

The company confirmed its full-year 2012 guidance of approximately 5% organic net revenue growth and at least 9% operating EPS growth on a constant-currency basis. 

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