Kraft Foods Boosts Earnings Outlook Again
NORTHFIELD, Ill. (AP) — Kraft Foods Inc., engaged in a hostile takeover bid for candy maker Cadbury PLC, boosted its full-year profit outlook for the second time in two months after logging strong operating gains, as it spent more on marketing its core brands.
The food company, whose products include Maxwell House coffee and its namesake cheese, has reduced its product lines during the economic downturn in order to concentrate on its most profitable products.
Kraft now anticipates 2009 earnings of at least $2 per share, compared with a prior forecast for a profit of at least $1.97 per share. In November, the Northfield, Ill., company increased its guidance to $1.97 from $1.93 per share.
Analysts surveyed by Thomson Reuters, whose estimates generally exclude one-time items, expect full-year earnings of $2 per share.
On Tuesday, Cadbury made its case against Kraft's $16.5 billion bid, saying its annual results would top estimates. The British company also said it will boost dividend payments by 10 percent.
Kraft's announcement comes as Italian chocolate company Ferrero International SA reportedly has decided it's not interested in bidding for Cadbury.
The business daily il Sole 24 Ore reported Wednesday that Ferrero, the maker of Nutella chocolate spread and Tic Tacs, decided after two days of talks with U.S. candy company Hershey Co. not to launch a joint counteroffer. The newspaper cited unidentified sources close to the family-run Italian chocolate maker. Ferrero had no comment.
Kraft Chairman and CEO Irene Rosenfeld maintained late Tuesday that her company will still be able to "deliver sustainable top-tier performance, with or without Cadbury." Kraft has held this position since November, when it was still in the process of making a firm offer for Cadbury.
If Kraft does win Cadbury, it would create an industry giant, combining the world's second-largest food maker and one of the world's largest confectioners.
Shares of Kraft Foods rose 64 cents, or 2.2 percent, to $29.93 in premarket trading.