Kraft Foods And Kellogg Weather The Storm

Kraft Foods Inc (KFT) and Kellogg Co (K) both topped analyst forecasts on quarterly earnings as each company passed on higher raw material costs to consumers by raising prices of their products. Rising wheat and fuel costs were offset by headcount reduction and various restructuring programs, including factory closings and the sales of underperforming units. The companies also spent more on advertising in the latest quarter to attract cash-strapped consumers.

In the third quarter, Kraft Foods’ net income more than doubled to $1.4 billion, or 93 cents per share, including 57 cents from the sale of its Post cereals unit. The company also reiterated its profit guidance for 2008 and 2009, encouraged by stronger-than-expected volume in a lackluster economy. It had earlier forecast earnings of at least $1.88 a share in 2008 and at least $2 a share in 2009.

Kellogg, on the other hand, saw net income rise to $342 million, or 89 cents per share, from $305 million, or 76 cents, a year ago. The company said full-year earnings should be close to the high end of its prior forecast of $2.95 to $3 a share, hoping that sales would remain steady with consumers preferring to eat at home over dining out.

Kraft Foods traded as high as $29.70 after the release of the quarterly results while Kellogg touched an intra-day high of $52.93 on the New York Stock Exchange.

Posted in Categories: Contributor, External Research, Stocks.

Subscribe by RSS Subscribe by Email