Kraft Foods Group, Inc. reported solid first quarter 2013 results driven by significant productivity gains and overhead cost savings as well as topline growth fueled by new products and increased investments in marketing.
Net revenues in the first quarter grew 2.1 percent to $4.5 billion. Organic net revenues increased 2.1 percent from volume/mix gains of 2.4 percentage points that were partly offset by a 0.3 percentage point impact from lower pricing. The timing of Easter shipments added between 0.5 and 1.0 percentage points of net revenue growth versus the prior year quarter while product line pruning negatively impacted first quarter growth by approximately 0.7 percentage points.
Operating income in the first quarter increased 9.2 percent to $809 million. Results reflected gains from productivity, overhead cost savings, improved product mix and volume growth. Restructuring Program costs increased $64 million to $119 million in the first quarter and negatively impacted operating income growth by 7.4 percentage points.
Earnings per share in the first quarter were $0.76. Earnings reflected strong gains from operations and puts the company on pace to deliver its full year earnings guidance. Interest expense in the quarter was $123 million or approximately $0.13 per share, reflecting the company's capital structure as an independent company. First quarter results also included $0.12 per share of restructuring program charges.
Free Cash Flow in the first quarter was $147 million. Strong operating performance and improved working capital management led to positive Free Cash Flow for the first quarter; a quarter that typically results in a use of cash.
"We're off to a solid start," said Tony Vernon, CEO of Kraft in a prepared statement. "Our first quarter results reflect strong returns on our new product innovations to date, as well as the fact that our cost savings outpaced our plans to reinvest in our brands. In the months to come, we'll execute our marketing playbook more broadly across our portfolio and we expect to see good progress in both top- and bottom-line performance for the full year."