Kraft Warns on 2013 Snack Business Outlook

by Christopher Freeburn | September 7, 2012 11:55 am

Kraft Warns on 2013 Snack Business Outlook

Kraft Foods (NASDAQ:KFT[1]) announced its profit outlook for 2013 on Thursday, forecasting that earnings at its snack business will be negatively affected by adverse overseas currency exchange rates[2].

Investors were not happy with the guidance. Kraft shares dropped more than 5% in Friday morning trading.

The company will split in two on October 1, with Kraft’s North American grocery business separating from its snack food business, which will be spun-off as Mondelez International, Reuters noted.

Mondelez’s earnings will be dented by the rising strength of the U.S. dollar, relative to emerging market currencies, company officials warned.

They predicted 2013 profits of between $1.50 and $1.55 a share for Mondelez. Looking forward, they also projected revenue increases of between 5% and 7% in the long term, with revenue closer to the low end of that estimate next year.

Declining coffee prices will also cut into Mondelez earnings as the company is forced to lower prices to match competitors.

Last month, Kraft Foods posted second-quarter earnings that topped Wall Street forecasts[3], but missed on lower revenues.

Endnotes:
  1. KFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=KFT
  2. will be negatively affected by adverse overseas currency exchange rates: http://www.reuters.com/article/2012/09/07/us-kraft-outlook-idUSBRE8851EJ20120907
  3. second-quarter earnings that topped Wall Street forecasts: http://investorplace.com/2012/08/kraft-tops-profit-forecasts-sets-spin-off-date/

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