Diluted EPS for the period more than doubled, to $0.93. The CPG giant raised its full-year 2008 guidance on organic revenue growth from 6% to 7%, and confirmed EPS full-year guidance (excluding items) of at least $1.88.
"Kraft had a strong quarter in a difficult environment," said chairman/CEO Irene Rosenfeld. "Our operating momentum continued, with solid top- and bottom-line contributions from all geographies. I am especially pleased that our volumes in the third quarter held up better than expected, despite significant cost-driven price increases and an unsettled economic environment. As family budgets are squeezed, our ongoing programs to add value to our products through investments in quality, marketing and innovation are paying off."
Kraft reported that its acquisition of Groupe Danone's global biscuits business contributed 9.3 percentage points to net revenue growth, partially offset by a 0.9 percentage-point impact from divestitures. Currency added 3.9 percentage points.
Like other F&B companies, Kraft has been challenged by dramatic rises in the costs of energy and input/commodities--particularly in this year's first half--and has raised consumer prices substantially to cover those. This has resulted in sales volume decreases in many product categories, although Kraft is positioned well because many of its core products/brands are value-oriented, points out Christopher Shanahan, research analyst, chemicals, materials and food, Frost Sullivan, a marketing research firm.
"Kraft had solid revenue growth, and although much of that was due to price increases, they are a strong brand with strong core products that do well in hard times," such as Kraft Macaroni & Cheese and Kool-Aid, he says.
Kraft's prices rose 6.7% overall, against an average overall volume decline of just 0.6%, points out Shanahan.
Noting that Kraft sold Post Cereals, Shanahan adds that he expects Kraft and other CPGs to continue to sell off less profitable brands in this calendar year's third quarter, and also expects that declines in energy costs and moderation of increases in commodities prices (although these are still at record levels) will also be beneficial to CPG's third-quarter performance.
Here's a rundown of Kraft's performance by category and geography: