Kraft Foods Group increased its advertising investment by more than 20% in 2012 and by even more than that in Q4, CEO Tony Vernon reported during a financials call on Feb. 15.
Kraft reported that Q4 net revenue was expected to be -10.7% (compared to 9.2% growth in Q4 2011). The decline includes a negative impact of 4.2 percentage points due to a 53rd week of sales in the prior year as well as a 0.7 percentage-point positive net impact from currency and sales to Mondelez International, Inc.
Q4 diluted EPS was $0.15, -72.2% vs. Q4 2011 $0.54. This includes a one-time, non-cash charge of approximately $0.24 per share due to the market-based impact from post-employment benefits, approximately $0.14 per share of restructuring program charges and $0.04 per share of unrealized losses from hedging activities.
The company announced that it is instituting a new strategy for post-employment benefits designed to improve transparency, simplify accounting and reduce funding volatility.
Full-year 2012 net revenues were projected at -1.7%. Diluted EPS was projected at $2.75, -8.3% versus $3 full-year 2012.
Final 2012 full-year results were expected to be reported no later than March 29.
Vernon stated: "While we weren't satisfied with our revenue in the fourth quarter, our innovation, productivity and overhead reduction programs are paying off. This enabled a double-digit increase in advertising, solid profit from operations and sizable cash flow. We're off to a strong start so far this year, and we remain well-positioned to drive profitable growth in 2013 and beyond."
For 2013, Kraft is expecting EPS to be approximately $2.75, up from previous guidance of $2.60.
It affirmed that 2013 organic net revenue growth is expected to be in line with the growth of the North American food and beverage market, despite negative impact of approximately one percentage point from product pruning.