PORTLAND, Ore. (AP) — Kraft Foods Inc.'s first-quarter net income dropped due to costs related to its acquisition of Cadbury, but its adjusted profit rose and beat expectations.
The company, which is the nation's largest food maker, earned $799 million, or 45 cents per share, for the quarter. That's down from $1.89 billion, or $1.16 per share, a year earlier. Excluding one-time items, Kraft earned 52 cents per share, versus 49 cents per share last year.
Revenue rose 11 percent to $12.57 billion, helped in part by higher prices.
The results beat analysts' average forecast for adjusted earnings of 46 cents per share on revenue of $12.31 billion.
Kraft, like most other food makers, has increased prices to offset higher costs for wheat, corn, coffee and other key commodities. The company says it expects those pressures to continue and remains cautious given the volatility in the market.
But Kraft's profit margins improved slightly during the first quarter and executives were confident the company has struck the right balance between ingredient costs and the prices it charges customers.
"We're off to a stronger-than-anticipated start to the year as our teams around the world execute our growth strategy," Irene Rosenfeld, chairman and CEO of Kraft, said in a statement.
Kraft, however, did lower its full-year earnings guidance to $2.20 from a previous estimate of $2.24 due to the end of a contract in March with Starbucks Corp. to distribute its coffee in stores. Analysts had been forecasting $2.23 a share.
Kraft said it increased its spending on marketing and product development, which helped boost business of existing brands like Chips Ahoy and Kraft Macaroni & Cheese, while giving strong starts to new products like its MiO liquid beverages mix and Oscar Mayer Carving Board cold cuts.
Shares of Kraft, which is based in Northfield Ill., rose 37 cents to $33.76 in extended trading following the release of the earnings report. They had ended the regular session down 46 cents at $33.39.