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Kraft Foods Group Reports 13 Percent Increase in Fiscal Q3 Earnings (KRFT)

Shares of  packaged-food company, Kraft Foods Group Inc. (NASDAQ: KRFT) edged up  on Wednesday after the maker of  Oscar Mayer deli meat and Kraft Cheese reported  better-than-expected fiscal third-quarter results as the introduction of expensive mix of products, productivity gains and increased advertising spending helped bolstering the top line growth.

Lately, the packaged-food industry has faced a period of very slow growth rate as consumer spending remained thrifty in the wake of macroeconomic uncertainty. Besides, volatility in the commodity prices is also likely to continue, according to the company. However, the company is now better equipped to overcome challenges with its new leaner structure.

In order to enhance the shareholder value, the board had decided to spun-off Kraft Foods Inc in to two separate divisions.  In addition, many jobs were also slashed and  ost cutting measures were also initiated.

While Kraft Foods Group’s product line now includes grocery business, Mondelez International   Inc. was created last month to oversee the global snacks business.

According to the management, the new set up is expected to bring in productivity gains. Whereas Mondelez earnings per share are expected to grow by double digit rates, Kraft’s grocery business will witness better cash flows, said the executives.

For the quarter, KRFT reported net earnings of $470 million or 79 cents a share up from $417 million or 70 cents a share, in the year earlier quarter. For the third quarter, the company also charged $54 million against restructuring cost.

Analysts polled by Thomson Reuters had most recently forecasted earnings of 69 cents on revenue of $4.56 billion.

Revenue for the period rose 3% to $ 4.61 billion. The Company attributed higher revenue to volume gains and introduction of more value added expensive product mix while small price increases also helped to strengthen top-line growth.

Meanwhile, the company maintained its outlook on fiscal 2013. The company is expecting full-year earnings at $2.60 a share even as revenue-growth is projected to fall in line with industry’s average.

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