Feb. 16, 2010, 10:48 a.m. EST
By Matt Andrejczak, MarketWatch
SAN FRANCISCO (MarketWatch) — Kraft Foods, the world’s No. 2 food company, reported Tuesday fourth-quarter profit almost quadrupled from the year-ago period, mostly on cost cuts stemming from the completion of a three-year restructuring.
Net income was $710 million, or 48 cents a share, compared to net income of $178 million, or 12 cents a share, in the year-earlier quarter. Analysts had forecast Kraft /quotes/comstock/13*!kft/quotes/nls/kft (KFT 28.54, -0.55, -1.89%) to earn 45 cents on sales of $11 billion, according to FactSet Research.
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Sales rose 3.2% to $11 billion. Gross profit margin increased to 37.5% of sales from 31.6%. At the end of 2009, Kraft wrapped up a three-year cost-cutting program that included shedding less-profitable brands, discontinuing product lines, and cutting jobs.
Volume rose 1.6% for the quarter ended Dec. 31. Kraft has been focused on growing volume after its U.S. market share stumbled last year, hurt by consumers trading down to cheaper items in the grocery store and retailer cutting inventories.
“Our top line reflected our resolve to avoid chasing unsustainable, promoted volume,” Chief Executive Irene Rosenfeld said in a statement.
Kraft now faces the big task of folding Cadbury’s chocolate and gum business into its operations. It took Kraft almost five months to win over Cadbury’s board.
After increasing its unsolicited offer last month, Kraft acquired U.K.-based Cadbury Feb. 2 in a deal worth $19 billion in cash and stock.
On Tuesday, Kraft reiterated its long-term forecast for the combined companies, pegging organic sales growth at 5% or more and earnings growth of 9% to 11%.
Kraft shares fell 2.8% to $28.42 in early morning trading.
Matt Andrejczak is a reporter for MarketWatch in San FranciscO
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