Kraft Foods reports lower earnings

US food manufacturer Kraft Foods Inc has reported a 27.7% fall in fourth-quarter profit. The company reported net earnings of US$628m for the fourth quarter of 2004, compared to US$869m for the same quarter of the previous year.
Quarterly net revenues were US$8.78bn, compared to US$8.21bn a year earlier, a 7% increase. Increased costs for raw materials and marketing and factory closings combined to drive down profits, according to the company. Like other food producers, Kraft has been hit by the buying power of the major discount retailers, both in Europe and the US, which are putting increasing pressure on costs and squeezing manufacturers margins. Chief executive Roger Deromedi said:
"We were particularly encouraged by the strong performance of our North American business, which grew fourth quarter revenues by more than 8%. The most significant among these challenges are benefits, packaging and energy cost increases, a difficult European retail environment, and the need to price certain businesses because of higher commodity costs."
As part of the reorganisation, Deromedi pledged to cut 6,000 jobs, sell off non-essential businesses to trim costs and focus advertising on its top brands. In the past few months, Kraft has sold off a number of non-core operations, such as Life Savers and Altoids to Wrigley.