Kraft Foods Inc. on February 16 reported 2009 results that demonstrated strong earnings and free cash flow growth in a continuing difficult global economic environment. Volume/mix improved sequentially throughout the year, and was a significant contributor to income growth and margin expansion.
"2009 was a strong finish to our three-year turnaround and gave us excellent momentum heading into 2010," said Irene Rosenfeld, chairman and CEO. "Despite the challenging economic environment, we generated exceptional profit and free cash flow. We continue to benefit from investments in our iconic brands. This is driving volume/mix gains and leveraging our cost structure to deliver sustainable, profitable growth. And our top line reflected our resolve to avoid chasing unsustainable, promoted volume."
Rosenfeld continued: "We're ready to begin an exciting new chapter at Kraft Foods, with Cadbury's brands as a valuable addition to our portfolio. Together, we'll remain focused on driving sustainable top-line growth, while delivering against our cost savings and synergy opportunities. As a combined entity, we are well positioned to deliver top-tier performance and accelerate our long-term growth."
- Net revenues in the fourth quarter increased 3.2 percent to $11.0 billion, including the favorable impact of 3.2 percentage points from currency and a negative 0.4 percentage point impact from divestitures. Organic net revenues grew 0.4 percent driven by 1.6 percentage points from volume/mix, partially offset by negative 1.2 percentage points from lower price levels. Volume/mix gains were negatively impacted by approximately 0.4 percentage points due to the discontinuation of less-profitable product lines. The lower price levels included the unfavorable impact of approximately 1.5 percentage points in response to lower dairy costs, consistent with the company's adaptive pricing model for its cheese business in the United States.
- Operating income in the fourth quarter nearly quadrupled from the prior year to $1,306 million. Lower costs due to the completion of the Restructuring Program in fourth quarter 2008 accounted for most of this increase. Operating income margin increased 870 basis points year-over-year to 11.8 percent. Approximately 760 basis points was driven by lower costs due to the completion of the Restructuring Program and lower asset impairment costs. The remainder of the margin increase largely reflected an improved alignment of prices with input costs, including net unrealized gains from hedging activities, and improved volume/mix. These gains were partially offset by significant investments in cost savings initiatives and marketing.
