Kraft's Q1 profits up thanks to Cadbury

Irene Rosenfeld

Unsurprisingly, Kraft's acquisition of confectionery giant Cadbury has seen them have better Q1 results than predicted with a net profit of $937m (£590m), up from $827m in the same period a year earlier.

As a result of buying Cadbury, net revenue rose 25.3 percent to $12.3billion, a direct result of the Cadbury acquisition which reportedly had a 22.8 percent favourable impact, as well as 0.8 percent from currency and a negative 0.3 percent impact from divestitures.

According to Kraft, operating income also rose, a 16.8 percent increase to $1.70 billion, including a favourable impact of 17.8 per cent from Cadbury's operations. That was partially offset by a negative 11 per cent impact arising from the integration programme and acquisition-related costs.

Speaking about the company's results, Irene Rosenfeld, Kraft chairman and chief executive, said, "Our first quarter results are early evidence of our future potential in combination with Cadbury."

"We demonstrated strong momentum in our Kraft Foods' base business, including high-quality top-line growth and strong operating gains. In addition, our Cadbury business delivered solid financial results."

European growth

Compared to last year, Cadbury's first quarter revenue was bolstered by solid growth in Britain and France, but was offset by weak economic conditions in Southern Europe, especially in Spain and Greece. As a result, the company said, revenue was ‘flat'.

"Chocolate grew low-single digits due to volume/mix gains, partially offset by lower price levels," according to a company statement. "Strong in-store marketing activities and continued momentum drove growth in Milka, Freia, Marabou and Toblerone."

Kraft Foods Europe's net revenues increased 34.1 percent, including a 31.8 percent contribution from Cadbury. Currency factors had a negative impact of 2.6 percent.

Since Kraft absorbed Cadbury, it is reported that about one third of Kraft's top 50 executives are from the UK confectionery company.

Speaking of the merger between the two companies, Rosenfeld said the take over should lead to even greater synergies later in the year.

"In light of our strong earnings momentum, we will reinvest our 2010 upside to build our brands and to harmonise business practices," she said.

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