Kraft Foods Outlines Growth Plans for North American Grocery Business Including Marketing Campaigns For Major Brands

Lastly, Kraft Foods Group will redefine efficiency to free up cash, in order to make these important investments in people, innovation and marketing. The company will employ several tools such as Lean Six Sigma, supply chain simplification and strategic sourcing, with the goal of becoming the lowest cost producer in its categories. Success will be measured through external benchmarking to reinforce a results-driven culture.

Long-term Outlook
Kraft Foods Group expects to be well-positioned over the long term to deliver steady, reliable growth with a strong focus on cash flow to fund a highly competitive dividend and reinvestment in people, innovation and brand-building. The company will consistently aim to accomplish:

• Organic revenue growth¹ at or above the North American food and beverage market rate of growth;
• Mid-single digit Operating Income growth;
• Mid-to-high single digit EPS growth;
• Mid-single digit dividend growth; and
• Free Cash Flow¹ of at least 85% of Net Income.

"Cash will be king at Kraft," said Tim McLevish, Chief Financial Officer of Kraft Foods Group. "What matters to shareholders is total return and dollars in their pockets. And cash will be the fuel to grow our business."

2013 Outlook
Kraft Foods Group will launch from a position of strength, having delivered four consecutive quarters of top- and bottom-line growth. In 2013, the company expects to continue that momentum with organic revenue growth in line with market growth, despite a negative impact of 1 point due to product pruning.

Productivity improvements and overhead savings are expected to drive 2013 EPS of approximately $2.60 on a GAAP basis. This outlook assumes interest expense of approximately $520 million and an effective tax rate of 35 percent. The results for the year also include restructuring costs of about $240 million (or 26 cents per share), compared to expected ongoing costs of about $125 million (or 14 cents per share) in a typical year. Free cash flow is expected to be about 70 percent of GAAP net income – below the long-term target of at least 85 percent due to an extra tax payment in 2013 of approximately $200 million.

The management team expects to recommend to the Board an annual dividend of $2.00 per share.

¹ Please see discussion of Non-GAAP financial measures at the end of this press release.