Kraft Tops Q3 Earnings Forecast

Kraft Foods (KFT 27.54) reported better-than-expected third quarter earnings, but revenues came in below expectations and the company lowered its 2009 organic net revenue forecast.

Kraft reported third quarter earnings of $0.55 per share, $0.07 better than the First Call consensus of $0.48.  Operating income of $1.42 billion was up 38.7% year-over-year.

Revenues fell 5.7% year-over-year to $9.8 billion, short of the $10.32 billion consensus.  Kraft said organic net revenues grew 0.5%, driven by gains in volume/mix but offset to some degree by pricing.

Kraft adjusted its outlook for 2009, saying it sees earnings of at least $1.97 per share, up from an earlier forecast of $1.93 and in-line with the $1.97 consensus. 

The company also also revised its forecast for 2009 organic net revenue growth to be approximately 2% versus a prior expectation of approximately 3%. The change in outlook primarily reflects a lower contribution from pricing as a result of lower-than-expected input costs. It also reflects management's decision to forego unprofitable volume as well as weakening economic conditions in certain countries in Western and Eastern Europe, the company said.

Regarding Kraft's possible offer for Cadbury, CEO Irene Rosenfeld said that Kraft "remain(s) interested but will maintain a disciplined approach."

Shares of KFT are about 1.6% lower an hour ahead of Wednesday's opening bell.