Kraft Foods Inc. reports steady progress

Kraft Foods Inc. reported steady progress with second-quarter 2006 results driven by favorable product mix, the benefits of a strong increase in advertising and continued cost savings. Net revenues for the second quarter grew 3.4% to $8.6 bn despite a negative 1.1 percentage point impact from divestitures and an unfavorable currency impact. Organic net revenue growth was 4.9% led by double-digit gains in Eastern Europe and Latin America as well as solid growth in North America. Product mix contributed 3.6 percentage points to organic net revenue growth behind brands such as Wheat Thins, South Beach Diet, Jacobs coffee and Cote d Or chocolate.
Second quarter net earnings were US$682m, an increase of 44.5% over last year, while diluted earnings per share were $0.41, up 46.4%, due to the impact of asset impairment, exit, and implementation costs, gains from the sale of businesses and earnings from discontinued operations are factored out.


"Second-quarter results reflect further improvements in Kraft s business fundamentals," said Irene B. Rosenfeld, Chief Executive Officer. "We re making good progress focusing and strengthening the portfolio, which will set the stage for accelerating our growth."


North America Snacks & Cereals reported net revenues grew 6.2% to $1.61 bn. Cookie revenues were up slightly as continued growth of Nabisco 100 Calorie Packs and whole grain Newtons was partially offset by lower Oreo revenue due to strong year-ago comparisons. Snack and cereal bars contributed strong double-digit growth driven by the continued success of South Beach Diet cereal bars. European Union reported net revenues fell 3.1% to $1.54 bn, but increased 3.5% excluding the impacts of unfavorable currency. In chocolate, revenue growth was primarily driven by volume and mix gains related to strong growth of Milka and premium Cote d Or chocolates.