Record dairy prices drag on Kraft

Kraft Foods Inc., the nation's biggest food and beverage maker, said Wednesday its fourth-quarter profit fell 6 percent, weighed down by record-high dairy prices and other one-time costs.

The company blamed a nearly 40 percent boost in dairy prices for a decline in the operating earnings of its core North American Cheese and Foodservice division, which saw its fourth-quarter profit fall by more than 53 percent.

Chief Executive Irene Rosenfeld said the company's price increases weren't enough to keep pace with the rising commodities pressures.

"The biggest surprise was the unprecedented high dairy costs and the fact that they remained at these high levels through year-end," she said.

Rosenfeld said the Northfield-based company would continue to raise prices in 2008 but expected the commodity prices to trail off in the second half of the year. Overall, net income fell to $585 million, or 38 cents per share, for the three months ending Dec. 31. That's down from $624 million, or 38 cents per share, during the same period last year.

ITW earnings rise

Illinois Tool Works Inc., the maker of Duo-Fast nail guns and Wilsonart countertops, said fourth- quarter earnings rose 7.2 percent on acquisitions and a lower tax rate. The shares fell 2.3 percent after profit forecasts disappointed investors.

Net income increased to $470.7 million, or 87 cents a share, from $439.3 million, or 77 cents a share, a year earlier, topping analysts' estimates. Sales climbed 19 percent to $4.24 billion, the Glenview-based company said Wednesday.

ITW has expanded into foreign markets through acquisitions to reduce its dependence on the U.S. market. For 2008, ITW forecast profit from continuing operations of $3.47 to $3.61 a share. Analysts, on average, project $3.68 a share, the average of 17 surveyed by Bloomberg.

Plane sales lift Boeing

Chicago-based Boeing Co. posted better-than-expected fourth-quarter earnings Wednesday on the strength of still-booming commercial airplane sales and improved productivity, easing investor concerns for now about the possibility of another setback for its thrice-delayed 787 Dreamliner.

"It was a strong quarter," said JSA Research analyst Paul Nisbet. "They've been just knocking the cover off the ball as far as orders, with 520 for the quarter, and with a (companywide) backlog of $327 billion. Those are just unheard-of numbers."

But Boeing's fortunes will largely rise or fall on the success of the 787, the world's first large commercial airplane made mostly of carbon-fiber composites.

Boeing's net income for the last three months of 2007 was $1.03 billion, or $1.36 per share, up from $989 million, or $1.29 per share, in the fourth quarter of 2006. That was 4 cents per share better than the consensus estimate of analysts polled by Thomson Financial. Revenue was virtually unchanged at $17.5 billion.

The company increased its guidance for 2008 earnings per share to between $5.70 and $5.85 from an earlier range of $5.55 to $5.75, still short of the Wall Street consensus estimate of $5.95.

Fewer Starbucks openings

Seattle-based Starbucks Corp. said Wednesday its fiscal first-quarter profit rose by less than 2 percent, and it detailed plans to open fewer domestic stores and more overseas to revitalize the coffee house chain.

During fiscal 2008, the company plans to open about 425 fewer domestic stores and 75 more overseas than previously planned, for a global total of 2,150 new stores. The company also plans to close about 100 poorly performing stores in the U.S. and quit serving warm breakfast sandwiches by the end of fiscal 2008. Chairman and Chief Executive Howard Schultz said the egg-and-cheese breakfast sandwiches were getting the boot because they interfered with the aroma of coffee.

Sales at stores open at least 13 months grew 1 percent in the latest quarter. For the 13 weeks ended Dec. 30, Starbucks posted net earnings of $208.1 million, or 28 cents per share, up from $205 million, or 26 cents a share, during the same period a year ago. Analysts were expecting 27 cents per share.

Revenue for the quarter was $2.77 billion, in line with estimates and up from $2.36 billion a year ago.

Pulte posts loss

Pulte Homes Inc., the No. 3 U.S. home builder, said Wednesday its quarterly net loss widened sharply as a deteriorating housing market led to charges related to the lower value of land and inventory and a tax-loss benefit.

The fourth-quarter net loss increased to $874.7 million, or $3.46 per share, from $8.4 million, or 3 cents per share, in the year-earlier quarter.

The U.S. housing market has been in a tailspin for more than two years, with top builders cutting prices and seeing orders dwindle. Sales of new, U.S. single-family homes plunged 26 percent in 2007, the U.S. Commerce Department reported on Monday.

Bloomfield Hill, Mich.-based Pulte recorded charges of $543.3 million, or $1.28 per share, related to lower values of land, inventory and goodwill.

Total revenue fell 34 percent to $2.9 billion, while home-building revenue fell 35 percent to $2.8 billion, mainly due to a 31 percent drop in the number of homes sold to 8,714. The average price selling price fell 6 percent to $319,000.

U.S. builders have shifted their focus to survival turning the excess land and inventory accumulated during the boom times of 2002-to-2006 into cash.