Kraft Foods Inc. reported strong fourth quarter and full year 2011 results, driven by robust revenue growth, effective cost management and focused investments in the company's iconic brands.
"We delivered terrific results in 2011, and our businesses are healthier than ever due to the disciplined execution of our strategy," said Irene Rosenfeld, Chairman and CEO in a prepared statement. "We expect to deliver top-tier growth in 2012, in line with our long-term targets, while we prepare to successfully launch the North American grocery and global snacks companies later this year."
For the full year, net revenues were $54.4 billion, up 10.5 percent. Organic net revenues grew 6.6 percent, driven by strong growth across all geographies. Pricing contributed 6.0 percentage points of growth, and volume/mix contributed 0.6 percentage points.
Operating income for the fourth quarter was $1.5 billion, and operating income margin was 10.3 percent. Underlying operating income, which excludes acquisition-related costs, integration program costs, and spin-off-related costs, grew 7.4 percent to $1.7 billion.
Operating income for the full year was $6.7 billion, and operating income margin was 12.2 percent. Underlying operating income grew 9.7 percent to $7.2 billion, driven primarily by effective management of input costs through pricing and productivity, favorable foreign currency and volume/mix gains. These gains were partially offset by the year-over-year change of unrealized gains/losses from hedging activities and the loss of the Starbucks CPG business. Underlying operating income margin of 13.3 percent was essentially flat versus the prior year despite the impact of the higher revenue base (from pricing) on the margin calculation.
Diluted earnings per share for the fourth quarter were $0.47, while Operating EPS was $0.57, including a negative impact from foreign currency of $0.01.
Diluted EPS for the full year was $1.99. Operating EPS was $2.29, up 13.4 percent, driven primarily by operating gains, lower tax costs, and favorable foreign currency. Earnings growth was tempered by the change in unrealized gains/losses from hedging activities, higher shares outstanding, the impact of divestitures and higher interest expense.
Adjusted free cash flow for the full year was $3.2 billion, essentially flat versus the prior year, with earnings growth offset by the impact of commodity inflation on working capital as well as higher capital expenditures.
Robust revenue growth and a continued focus on cost management fueled strong operating income gains in Kraft Foods North America.
Net revenues for the fourth quarter increased 8.9 percent, while organic net revenues increased 7.0 percent.
Net revenues for the full year increased 5.1 percent. Organic net revenues grew 4.8 percent, led by higher pricing across each business segment and significant contributions from new products.
Segment operating income increased 12.7 percent for the fourth quarter. For the full year, segment operating income grew 3.6 percent, including a negative 3.4 percentage point impact from divestitures (primarily the Starbucks CPG business). Excluding this factor, the growth in full year segment operating income reflected effective management of input costs, lower SG&A and the impact of a 53rd week of shipments, partially offset by unfavorable volume/mix.
Continued investment behind power brands and focus on cost management drove strong top- and bottom-line gains in Kraft Foods Europe in every quarter this year.
Net revenues for the fourth quarter increased 7.5 percent, while organic net revenues increased 3.1 percent.
For the full year, net revenues grew 14.9 percent. Organic net revenues increased 4.6 percent as strong brand equities enabled a positive contribution from volume/mix despite significant pricing actions. Power brands grew more than 7 percent.