Kraft Foods reports strong Q2 profits despite lower revenue

Northfield, Illinois-based Kraft Foods released Q2 2009 profits, reporting a strong 11-percent increase in total profits to $827 million ($0.56 per share), compared to $745 million ($0.49 per share) in the same period last year.

The company managed to increase profits despite revenue falling by 5.9-percent to $10.16 billion (analyst expected $10.37 billion in revenue).

The savings could be attributed to a massive completed restructuring plan that saw to lower total costs and improve its product offerings. The company plans to cut an additional $50 million as part of its cost cutting plan.

 The company says it will continue to grow based on increased sales volume and offering a more diverse product mix.

Product prices however were higher as the company maintains margins because of record high food prices. Kraft CEO Irene Rosenfeld said the company improved its brand, and is hence able to sustain the higher prices it offers.  She recently told the AP, “We’ve made great progress in rebuilding our brand equities and improving our pricing power and strengthening our innovation pipeline,”

Kraft says it expects to earn at least $1.93 per share by the end of this year.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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