Northfield-based Kraft Foods Inc. reported a strong second quarter and first half that company officials said was due to growth in its Power Brands products, as well as favorable global pricing, productivity gains and aggressive overhead cost management.
The company also said it plans to split its North American grocery and international foods units into two companies on Oct. 1.
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While net revenues in the second quarter were down 4.3 percent to $13.3 billion for the quarter, organic net revenues grew 3.4 percent, driven by nearly 6 percent growth from its Power Brands. Favorable pricing of 4 percentage points was partially offset by .6 percentage points from lower volume/mix, then company said in a statement.
"Our second quarter and first half results reflect the success of our brand-building investments over the past few years and the resilience of our businesses," said Irene Rosenfeld, Chairman and CEO. "As we embark on our journey as two industry-leading, independent companies, I'm confident that both companies have the brands, the executional capability, and the leadership teams to succeed in their respective missions."
For the first half of 2012, net revenues fell .3 percent, while organic net revenue increased 4.9 percent. Volume/mix contributed 0.2 percentage points despite substantial pricing and a negative 0.5 percentage point impact from product pruning. Power Brands increased more than 8 percent.
Kraft also announced it intends to spin off the North American grocery business, Kraft Foods Group, Inc. on Oct. 1, The final effective date and terms of the spin off of Kraft Foods Group are subject to the approval by the Kraft Foods Inc. Board of Directors and satisfaction or waiver of other conditions. Kraft's integrational foods business will be called Mondelez International.
At the time of the spin off, each of the company's shareholders entitled to receive shares of Kraft Foods Group will receive one share of Kraft Foods Group for every three shares of Kraft Foods Inc. The record date is not yet finalized, but is expected to be in mid-September. We expect the common stock for both companies to begin to trade on a "when-issued" basis shortly before the record date.
Beginning Oct. 2, 2012, Kraft Foods Group will begin to trade on The Nasdaq Global Select Market under the ticker symbol "KRFT." Kraft Foods Inc. will change its name to Mondelez International, Inc. and change its ticker symbol to "MDLZ." The current ticker symbol, "KFT," will be retired.
Both Kraft Foods Group and Mondelez International plan to host investor events in early September. The company will announce details for these events by mid-August.
Kraft also announced Tracey Belcourt will join the company as executive vice president, strategy, in September. Belcourt, 45, will lead the strategy function and mergers and acquisition activities for Mondelez International Belcourt will report to Rosenfeld, with responsibility for evolving and implementing the company's growth strategy.
She has been a partner at Bain & Co. in Toronto since 1999, leading teams that specialized in the design and implementation of growth strategies to improve business performance across a variety of consumer industries. She was an economic consultant to the U.S. Agency for International Development in Africa in 1999, and prior to that, served for five years as an assistant professor of economics at Concordia University in Montreal. Belcourt earned a master's degree and Ph.D. in economics from Queen's University in Canada and a bachelor's degree in mathematics and economics from the University of Alberta.