Kraft Foods Inc. said Wednesday that its fourth-quarter profit fell 72 percent due to costs related to a restructuring program, and the company cut its 2009 guidance because of the stronger dollar and pension costs.
The maker of Velveeta, Oreo cookies and Maxwell House coffee reported net income of $163 million, or 11 cents per share, compared with $585 million, or 38 cents per share, a year earlier.
Excluding one-time items related to asset impairment, exit and implementation costs, and an adjustment on a gain from its split-off of Post cereals, net income was 43 cents per share. That is a penny short of the 44 cents per share analysts polled by Thomson Reuters, on average, expected.
The Northfield, Ill.-based company said revenue rose 6 percent to $10.77 billion from $10.14 billion last year. That missed analyst predictions of $11.29 billion as North American volume fell amid markdowns and inventory reduction by retailers, and as the company pruned less profitable items. Overall volume was down 5.2 percent in the quarter.
The strongest product category was U.S. convenient meals, including DiGiorno and California Pizza Kitchen pizzas, helped by price increases and as consumers continued to eat more from the grocery store rather than restaurants.
Chief Executive Irene Rosenfeld told analysts on a conference call the company is able to respond faster to changes in the marketplace and raise prices more quickly to recoup higher costs. In the quarter, Kraft's pricing contributed 9.8 percentage points of growth.
"We priced aggressively because it was the right thing to do to address rapidly rising input costs and to preserve our ability to invest in our brands," she said.
The company cut 2009 earnings guidance to $1.88 per share from $2 per share, due to the stronger dollar weighing on international markets and pension costs. Analysts expect a profit of $2.02 per share. It said if the U.S. dollar weakens, earnings per share will improve more.
It expects 2009 revenue to grow about 3 percent excluding acquisitions, from a previous expectation of about 4 percent.
For the year, profit rose 12 percent to $2.9 billion, or $1.92 per share, from $2.59 billion, or $1.62 per share. Revenue rose 17 percent to $42.2 billion from $36.13 billion a year ago.