PORTLAND, Ore. (AP) — Kraft Foods Inc. turned to price increases to cope with rising ingredient costs and lackluster sales volume during its third quarter.
Those price increases and Kraft's recent acquisition of Cadbury PLC drove its revenue up 26 percent to $11.9 billion for the quarter. But the company said Thursday that its net income fell more than 8 percent as it spent more to promote its brands.
"We had continued solid performance in a difficult environment," CEO Irene Rosenfeld said in an interview.
The company, which is one of the world's largest food makers, joins competitors such as General Mills Inc., Sara Lee Corp. and Kellogg Co. who are adjusting their prices to cope with higher costs of wheat, coffee, dairy sugar and other ingredients.
Kraft said that in many cases it was dealing with costs that were up 20 percent and 30 percent from a year earlier. The company did not say how much it has increased prices that consumers will pay but said it varies by category.
Kraft said it earned $754 million, or 43 cents per share, for the quarter. Excluding acquisition-related costs, it earned 47 cents per share. That's down from $824 million, or 55 cents per share, in the same quarter last year.
The results beat analysts' average expectations for earnings of 46 cents per share on revenue of $12.01 billion, according to Thomson Reuters. Analysts typically exclude one-time items.
The company said its investment in some key brands — including more than doubling its spending in North America alone — paid off as products such as Ritz crackers and Capri Sun drinks sold well.
Rosenfeld said Cadbury, which Kraft acquired in February, has had a "transformative" impact on the company. The integration of the British candy company is proceeding smoothly, she said. Kraft is on track to cut annual costs at least $750 million, with about 15 percent coming this year.
Kraft shares fell 59 cents, nearly 2 percent, to $31.20 in after-hours trading.
