Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
NEW YORK (AP) - Kraft Foods said Thursday that cost cutting and one-time gains helped boost its quarterly profit, but its sales just missed Wall Street expectations.
The maker of Oscar Mayer meats and Jell-O pudding said its core revenue rose 3.2 percent, as higher volumes offset reduced prices. The results benefited from an easy comparison from a year earlier, when retailers didn't buy as much because they were stocked up on inventory in preparation for Kraft's split from Mondelez.
That split in late 2012 was intended to allow each company to focus on a more targeted stable of brands. Mondelez walked away with global snack brands with bigger growth potential, such as Oreo and Chips Ahoy. Kraft held onto brands such as Maxwell House, Miracle Whip and Planters, which are sold chiefly in the saturated North American market.
In an earnings call, CEO Tony Vernon also noted that Kraft faced "continuing headwinds in the near term," due to factors such as the cut in SNAP benefits, formerly known as food stamps, and the weak job market.
But he nevertheless expressed confidence for the future, noting the company's plans to revive the dated images of brands such as Kool-Aid, Jell-O and Crystal Light. Vernon pointed to Kraft's improved cheese business as an example of what it could do with other areas.
"If we can turn around cheese, we can turn around Jell-O," he told analysts.
The cheese unit did suffer a setback in the quarter, however, as a manufacturing issue triggered a string cheese recall. Kraft spokesman Basil Maglaris said the issue has been resolved and that Kraft expects to get most its string cheese items back in stock by the end of March.
In the meantime, the Northfield, Ill.-based company has made cost controls a priority given the limited growth prospects. The company said such measures helped boost operating income in the quarter.
For the fourth quarter ended Dec. 28, Kraft earned $931 million, or $1.54 per share, including a $1.11 per-share benefit tied to its retirement plans. The company did not specify an earnings-per-share figure adjusted for one-time items.
Excluding one-time items, analysts expected 61 cents per share, according to FactSet.
A year earlier, Kraft earned $90 million, or 15 cents per share.
Revenue for the quarter rose to $4.6 billion, but was shy of the $4.63 billion Wall Street expected.
Shares of Kraft Foods Group Inc. rose 1 percent to $54.20 in after-hours trading.
(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
