12 Feb 2011

Profit down at Kraft

8:42 am on 12 February 2011

Kraft Foods, the owner of Cadbury, has reported a fall in quarterly profits.

Despite the Cadbury takeover helping to boost sales by 30%, Kraft's net profit for the fourth quarter fell 24% to $US540 million due to costs associated with integrating the business.

Kraft also warned that it would be increasing prices to offset rising commodity costs.

The BBC reports a similar warning was issued by PepsiCo on Thursday.

Kraft, whose brands include Oreo cookies and Maxwell House coffee, has had to contend with the higher cost of ingredients such as corn, sugar and cocoa.

The company has already raised prices on most of its products in Europe and on more than half of those in North America. It plans more increases this year.

Kraft completed a £11.5 billion takeover of Cadbury at the beginning of 2010.

Taking into account integration costs, the acquisition knocked about 33% off Kraft's earnings per share.

Although the addition of Cadbury increased Kraft's total sales, it was a mixed quarter for the chocolate maker itself.

Cadbury sales in Europe were flat, with solid growth in Britain offset by weaker sales of sweets and chewing gum in southern Europe. Sales in North America fell 6.1%.