• by Karlene Lukovitz  @KLmarketdaily, November 4, 2009

Kraft Foods Inc.'s Q3 '09 net revenues declined 5.7% to $9.8 billion, as a result of unfavorable currency effects and divestitures. In addition, for the same reasons, the company lowered its organic net revenue growth projection for the full year from 3% to 2%.

However, Kraft's organic net revenues for the period grew 0.5%, and the company beat analysts' expectations with a 55-cent-per-share profit (excluding some items) for the period, compared to 34 cents in the same period last year.

Furthermore, Kraft raised its full-year earnings-per-share guidance to at least $1.97, from previous guidance of at least $1.93.

That forecast includes costs associated with Kraft's possible takeover of Cadbury plc. Kraft filed its $10 billion pounds ($16 billion) takeover bid on Aug. 28, and UK regulators have given it until Nov. 9 to make a formal offer or cease its takeover efforts for six months, according to Bloomberg.com.

The full-year forecast also includes significantly higher marketing spending. Kraft made a conscious decision to "reinvest part of our operating gains into incremental marketing programs to drive future growth," chairman and CEO Irene B. Rosenfeld said during the Nov. 3 earnings conference call. "Last year, our advertising and consumer spending as a percentage of net revenue was 6.7%," she said. "For 2009, our A&C spending will be up high single digits to approximately 7% of net revenues, even though advertising rates have declined considerably."

Kraft's strongest-performing businesses for the quarter were Developing Markets, US Convenient Meals and US Beverages -- showing organic net revenue growth of 8.1%, 5% and 1.5%, respectively. The worst performer was US Cheese, which showed a 10.3% decline in organic net revenue.

US Grocery organic revenue fell 3%. However, CFO and EVP Timothy R. McLevish reported that this reflected difficult comparisons with prior-year volume and discontinuation of unprofitable lines. McLevish also stressed that Kraft's investments in innovation and marketing continue to pay off.

"Investments behind Miracle Whip and Kraft Mayo drove growth in spoonable dressings and Jell-O dessert continued to deliver strong growth behind value-oriented marketing," he reported.