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The Globe and Mail

Kraft sees growth despite pruning products

Kraft Macaroni and Cheese is displayed at the company's headquarters in Northfield, Illinois, in this February 10, 2009 file photo.


Kraft Foods Inc. forecast earnings growth of at least 9 per cent this year even as it prunes its portfolio of North American brands.

Kraft, North America's largest packaged food maker, will separate into two companies later this year. One will focus on snacks like Cadbury chocolate and Oreo cookies, and the other will focus on North American grocery brands including Maxwell House coffee and Oscar Mayer lunch meat.

Kraft forecast 2012 net revenue growth of about 5 per cent, including a hit of up to one percentage point from "product pruning" in North America.

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The company said it expected operating earnings to rise at least 9 per cent on a constant-currency basis, reflecting a higher tax rate and a 4 percentage point hit from higher pension costs.

Shares of Kraft were up 1.1 per cent at $38.44 in trading before the market opened.

Kraft also said it would incur one-time costs of $1.6-billion (U.S.) to $1.8-billion as it prepares its split. It also might incur fees of between $400-million and $800-million as it migrates debt to the North American grocery company.

The company also reported quarterly earnings that met Wall Street estimates.

It said net income was $830-million, or 47 cents per share, in the fourth quarter, up from $540-million, or 31 cents per share, a year earlier.

Excluding items, earnings were 57 cents per share, in line with the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 6.6 per cent to $14.7-billion. Organic net revenue, which excludes the effects of acquisitions, divestitures, currency and calendar changes, rose 6.1 per cent.

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Organic revenue rose 7 per cent in North America, 3.1 per cent in Europe and 7.2 per cent in developing markets.

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