WASHINGTON (dpa-AFX) - Kraft Foods Group Inc (KRFT) Wednesday reported a plunge in second-quarter profit despite a marginal increase in sales, hurt mostly by higher selling and other expenses, while the prior year included one-time gains.
Results for the quarter fell short of Wall Street estimates, partly on flat beverage sales and weakness at its meals and desserts segment, while cheese and refrigerated meals businesses saw some growth.
Commenting on the results, Kraft CEO Tony Vernon said consumer trends pose challenges for the food and beverage industry, even as the company focuses on branding, innovation and cost management.
Kraft, based in Northfield, Illinois, posted quarterly net earnings of $482 million or $0.80 per share, compared with $829 million or $1.38 per share last year.
Results for the quarter included a loss of $0.02 per share from hedging activities. The prior year recorded $0.62 per share benefit from market-based impacts to post-employment benefit plans.
On average, 15 analysts polled by Thomson Reuters projected earnings of $0.83 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the second quarter was up 0.7 percent at $4.75 billion, compared with $4.72 billion in the prior year. Thirteen analysts had a consensus sales estimate of $4.84 billion for the quarter.
Sales at the company's cheese segment rose 1.6 percent from the prior year, due mainly to pricing actions in response to high dairy costs. Refrigerated meals sales climbed 2.6 percent, led by price increases, volume/mix gains, an Easter timing benefit in bacon and continued momentum in lunchables.
Beverages sales were flat compared with a year ago. Meals and desserts sales slid 5 percent, hurt by weakness in ready-to-eat Jell-O desserts and lower pricing due to increased promotional activity behind Kraft and Velveeta dinners.
Enhancers and snack nuts sales increased 1.4 percent.
Selling and other expenses for the quarter increased 25.4 percent from a year ago to $647 million.
Kraft in 2012 split from parent Kraft Foods Global Inc, with the international snacks unit named Mondelez International Inc (MDLZ).
Kraft stock closed Wednesday at $57.24, down $0.52 or 0.90%, on a volume of 2.9 million shares on the Nasdaq. In after hours, the stock dropped $0.84 or 1.47% at $56.40.
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