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Kraft Foods reports Q2 results

Beverage sales flat during quarter

July 31, 2014
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Kraft Foods Group Inc., Northfield, Ill., reported a 0.7 percent increase in net revenue to $4.7 billion for the second quarter of 2014, which ended June 28, compared with the prior-year period. Organic net revenues also increased 1.5 percent from improved volume/mix and pricing benefits of 0.9 percentage points and 0.6 percentage points, respectively. Revenue was favorably impacted by approximately 2.5 percentage points from Easter-related shipments shifting to the second quarter of this year, the company notes. Excluding this factor, volumes were negatively impacted by significant price increases in response to higher input costs, it adds.

"We continue to execute our playbook and are on track to deliver another solid year of growth in earnings and cash flow," said Kraft Chief Executive Officer Tony Vernon in a statement. "However, there's no question that economic and consumer trends are creating top-line growth challenges for the food and beverage industry — Kraft included. Our focus remains on driving profitable growth through brand renovation, innovation, impactful marketing and total cost management."

For Kraft’s beverage portfolio in particular, net revenues of $748 million were flat compared with the prior year, as volume gains driven by coffee and Capri Sun ready-to-drink beverages were offset by lower pricing caused by an increase in promotional spending versus the prior year, the company explains. Furthermore, operating income declined 10.3 percent as the benefits of volume growth and lower spending on cost savings initiatives versus the prior year were more than offset by the impact of lower pricing, it adds.

For the six months ending June 28, Kraft reported a 1.3 percent decline in net revenue, with net revenue for its beverage portfolio declining 2.5 percent during the timeframe, compared with the prior-year period.

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