Kraft Foods: reports solid progress on growth strategy

Northfield / IL. (kf) Irene Rosenfeld, Chairman and CEO of Kraft Foods Inc. highlights the solid progress the company has made during the first six months of executing its long-term growth strategy. «We are making good progress on the four strategies that will help return Kraft to reliable growth (…) and our investments are beginning to pay off in stronger top-line momentum», the CEO told the investor community in Boston (Massachusetts).

Kraft´s four growth strategies are: rewire the organization for growth; reframe the company´s categories to make its portfolio more relevant to consumers; exploit Kraft´s sales capabilities; and drive down costs without compromising product quality.

Much of Rosenfeld´s presentation focused on the priority investments the company is making to reframe its categories and how these investments are paying off. The company is spending an incremental 300 to 400 million USD in 2007 on product quality improvements, new products and increased marketing. Kraft expects to spend at the high end of this range, with the bulk of its investment coming in the second half of the year.

The company is making significant changes to its leadership, reward systems and structure to rewire the organization for growth. Over the past year, the company has built a new management team, with roughly half of its top executives new to Kraft or new to their position. In addition, Kraft has linked its annual incentive program more directly with business unit performance and its long-term incentive program with key drivers of value creation – organic revenue growth, operating income growth, cash flow and total shareholder return.

Kraft remains confident in its 2007 outlook. Last month, the company raised its organic net revenue growth expectation for the year to four percent plus. Now Kraft raised its guidance on full-year diluted EPS to 1,60 to 1,62 USD on a reported basis, from a previous range of 1,55 to 1,60 USD. The company increased guidance on diluted EPS, excluding items affecting comparability, to 1,80 to 1,82 USD from a previous range of 1,75 to 1,80 USD.

Rosenfeld also reported that the company remains on track to deliver one billion USD in savings from its total three billion USD, multi-year restructuring program (press release).

bakenet:eu