NORTHFIELD, ILL. — Net income of Kraft Foods Inc in the second quarter ended June 30 was $829 million, equal to 56c per share on the common stock, up 27% from $747 million, or 44c per share, in the second quarter of 2008. Net sales were $10,162 million, down 6%.
The company attributed the jump in profits to "strong performance across all geographies." Revising the outlook for 2009 earnings per share, the company issued guidance of at least $1.93, up from $1.88.
"The investments we’ve made over the past three years are driving solid business momentum in a challenging economic environment," said Irene Rosenfeld, chairman and chief executive officer. "We’re on track to deliver strong top- and bottom-line results, restore our profit margins to industry averages and consistently deliver against our long-term earnings growth target of 7% to 9%."
Expanding on the 6% decline in net sales, Kraft said the unfavorable impact of foreign currency changes reduced sales by 8.1 percentage points with another 0.7 points from divestitures. Organic net revenues grew by 2.9%, including 2.7 points from pricing and 0.2 percentage points from volume/mix. Sales were bolstered by the shift to Easter-related shipments into the second quarter but were hurt by discontinued, less profitable product lines.
Operating income was $1,531 million, up 8% in the second quarter from the same period last year. The operating income margin expanded by 190 basis points year-over-year to 15.1%. Favorable product mix and the completion of a restructuring program accounted for 180 of the 190 points.
Also helping bottom-line results was a decrease in the tax rate to 32% from 38%.
Within Kraft Foods North America, operating income was up 10% from the second quarter last year in U.S. Beverages; up 16% in U.S. Cheese; up 37% in U.S. Convenient Meals; up 11% in U.S. Grocery; down 8% in U.S. Snacks; and up 11% in Canada and N.A. Foodservice.
Second-quarter sales were up 6% in U.S. Beverages; down 9% in U.S. Cheese; up 7% in U.S. Convenient Meals; down 7% in U.S. Grocery; up 1.3% in U.S. Snacks; and down 0.5% in Canada and N.A. Foodservice.
For the six months ended June 30, Kraft net income was $1,491 million, or $1.01 per share, up 11% from $1,348 million, or 80c per share. Sales were $19,558 million, down 6%.
Commenting on the revised earnings guidance, the company credited "strong year-to-date performance as well as incremental investments in marketing and cost savings initiatives to drive further growth."