Kraft Foods Inc. Earnings: Revenue Grows Again by Double-Digits, Company Plans to Split Into Two Companies

S&P 500 (NYSE:SPY) component Kraft Foods Inc. (NYSE:KFT) reported net income above Wall Street’s expectations for the second quarter. Kraft Foods Inc. manufactures and markets packaged food products, including snacks, beverages, cheese and convenient meals.

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Kraft Foods Earnings Cheat Sheet for the Second Quarter

Results: Net income for the food company rose to $976 million (55 cents per share) vs. $937 million (53 cents per share) in the same quarter a year earlier. This marks a rise of 4.2% from the year earlier quarter.

Revenue: Rose 13.3% to $13.88 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: KFT reported adjusted net income of 62 cents per share. By that measure, the company beat the mean estimate of 58 cents per share. It beat the average revenue estimate of $13.15 billion.

Quoting Management: “As our second quarter results once again show, our businesses are benefiting from a virtuous cycle of growth and investment, which we fully expect will continue,” said Chairman and CEO Irene Rosenfeld. “We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realize their full potential. The next phase of our development recognizes the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins, and the clear ability to generate significant cash flow.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 18.2%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 24.9% from the year earlier quarter.

Gross margin shrank 3.2 percentage points to 35.1%. The contraction appeared to be driven by increased costs, which rose 19.2% from the year earlier quarter while revenue rose 13.3%.

Last quarter’s profit increase breaks a streak of three consecutive quarters of year-over-year profit decreases. In the first quarter, net income fell 57.6% from the year earlier, while the figure dropped 23.9% in the fourth quarter of the last fiscal year and 8.5% in the third quarter of the last fiscal year.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with net income of 52 cents versus a mean estimate of net income of 47 cents per share.

Competitors to Watch: General Mills, Inc. (NYSE:GIS), J&J Snack Foods Corp. (NASDAQ:JJSF), Ralcorp Holdings, Inc. (NYSE:RAH), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Kellogg Company (NYSE:K), ConAgra Foods, Inc. (NYSE:CAG), Inventure Foods, Inc. (NASDAQ:SNAK), TreeHouse Foods Inc. (NYSE:THS), PepsiCo, Inc. (NYSE:PEP), and Golden Enterprises, Inc. (NASDAQ:GLDC).

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(Source: Xignite Financials)