New Kraft Foods Group Delivers Strong Third Quarter 2012 Results
Newly independent Kraft Foods Group, Inc. reported strong third quarter 2012 results with top- and bottom-line growth fueled by new products, increased investments in advertising and consumer spending and significant productivity gains.
"Our third quarter results demonstrate the power of our brands, our people and our innovation," said Tony Vernon, CEO of Kraft, in a prepared statement. "We have an excellent foundation as a new and independent Kraft, and we're confident we have what it takes to fulfill our mission of becoming the best food and beverage company in North America."
Net revenues in the third quarter 2012 grew 3.0 percent to $4.6 billion. Organic net revenues increased 3.2 percent from volume/mix gains of 2.6 percentage points and favorable pricing of 0.6 percentage points, reflecting significant gains from new products. The customer inventory shifts in the third quarter, largely related to the spin-off, benefited volume/mix by 2.6 percentage points. These gains were partly offset by 1.3 percentage points from product pruning.
The company's operating income in the third quarter increased 7.6 percent to $762 million. The operating income growth reflected volume/mix gains, improved productivity and increased investments in advertising and consumer spending. The restructuring Program costs of $54 million negatively impacted operating income growth by 7.7 percentage points while the year-over-year change in unrealized gains/losses from hedging activities added 10.2 percentage points of growth.
The spin-off of Kraft by Mondelez International, Inc. was completed on Oct. 1, 2012. Kraft's financial statements for the third quarter ended Sept. 30, 2012 were prepared on a "carve-out" basis, reflecting an allocation of costs incurred by its former parent company. The carve-out financials are not indicative of the complete future cost structure or expected future financial results of Kraft as an independent company, particularly in the areas of interest, taxes, overhead and pension costs.
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