| NORTHFIELD, Ill.--(BUSINESS WIRE)--Feb. 21, 2006--In a presentation to the
financial community today, Roger K. Deromedi, CEO of Kraft Foods Inc.
(NYSE:KFT), a global leader in branded food and beverages, reviewed the
company's progress against its Sustainable Growth Plan and reaffirmed the
company's 2006 earnings guidance communicated in January.
Deromedi presented at the annual Consumer Analyst Group of New York (CAGNY)
Conference, held in Scottsdale, AZ.
"Our Sustainable Growth Plan is fixing our business, enabling us to take
better advantage of both our scale and one of the best brand portfolios in the
food and beverage industry," Deromedi said. "While our financial performance has
lagged our improving business fundamentals, I'm confident that strong execution
of our strategies will deliver improved results in 2006 and beyond."
Building Superior Consumer Brand Value
Deromedi reviewed the
company's efforts to improve its Brand Value propositions - providing the right
bundle of consumer benefits at the right price - including managing price gaps,
increasing investments in advertising and, most importantly, strengthening new
product innovations.
Kraft is focusing its innovation efforts on "fewer, bigger and better" growth
platforms that yield higher revenue-per-pound. These growth platforms address
consumer needs such as health and wellness, convenience and premium taste, and
benefit from Kraft's scale by leveraging the company's proprietary technologies
across its core categories. For example, the South Beach Diet product line,
which crosses many of Kraft's categories and is in-line with each of these key
trends, achieved more than $170 million in sales in its first ten months on the
market. Other growth platforms highlighted by Deromedi included:
- Health and Wellness. Kraft's innovative use of whole grain
technologies impacted many areas of the company's portfolio, from Wheat
Thins crackers to Chips Ahoy! cookies to belVita snack bars.
Similarly, the company's fortification technologies are adding important
nutritional benefits to products as diverse as Kraft cheeses,
Kraft SuperMac & Cheese dinners and Tang powdered beverages.
- Convenience. Whether it's in the cheese and dairy sector
(Kraft to Go crackers & cheese), convenient meals (Easy Mac
cups), coffee (Jacobs and Maxwell House sticks) or refreshment
beverages (Crystal Light sticks and Kool-Aid singles), Kraft is
helping consumers with innovative ways to make their favorite foods and
beverages fit into their increasingly busy lives.
- Premium Taste. In each of its sectors, Kraft is expanding its
offerings of premium-quality products for which consumers are willing to pay a
premium price. With diverse products such as California Pizza Kitchen
frozen pizzas, Good Seasons salad dressings, Cote d'Or chocolates,
and the Tassimo hot beverage system, the company is continuing to
leverage its categories beyond their mainstream origins to keep pace with the
evolving demands of today's marketplace.
2006 Outlook
During the presentation, Deromedi reconfirmed Kraft's
2006 full-year guidance. The company projects diluted earnings per share of
$1.38-$1.43 in 2006, including $0.50 in restructuring and impairment
charges.
"We expect our momentum to build as 2006 progresses," said Deromedi. "We
believe that our market shares will continue to improve, our top-line growth
will accelerate, our cost savings will grow and the quality of our earnings will
improve."
Ongoing constant currency revenues are projected to grow around 3% or greater
in 2006 on a comparable 52-week basis (approximately 1% including the impact of
one less shipping week than in 2005). Full-year discretionary cash flow,
including divestiture proceeds, is projected to be $2.7 billion.
Deromedi also affirmed Kraft's long-term financial targets, which include 3%
growth in ongoing, constant currency revenues, 4-7% growth in operating income,
6-9% earnings per share growth and discretionary cash flow growth of 1-2
percentage points higher than growth in earnings per share.
Kraft Foods is the world's second-largest food and beverage company. For more
than 100 years, we've been dedicated to helping people around the world eat and
live better. Hundreds of millions of times a day, in more than 155 countries,
consumers reach for their favorite Kraft brands including Kraft cheeses
and dinners, Jacobs, Gevalia and Maxwell House coffees,
Oscar Mayer meats, DiGiorno pizzas, Oreo cookies,
Ritz and Wheat Thins crackers and chips, Philadelphia cream
cheese, Milka and Cote d'Or chocolates, Honey Bunches of
Oats cereals, Good Seasons salad dressings and Tang and
Capri Sun refreshment beverages. Consumers have also started adding our
new products like Tassimo hot beverage system, South Beach Diet
line and a growing range of better-for-you Sensible Solution products to
their shopping baskets, continually expanding their list of Kraft favorites.
For more information on Kraft Foods, please visit our website at
www.kraft.com.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other
forward-looking statements. One can identify these forward-looking statements by
use of words such as "strategy," "expects," "plans," "anticipates," "believes,"
"will," "continues," "estimates," "intends," "projects," "goals," "targets" and
other words of similar meaning. One can also identify them by the fact that they
do not relate strictly to historical or current facts. These statements are
based on the company's assumptions and estimates and are subject to risks and
uncertainties. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the company is hereby identifying
important factors that could cause actual results and outcomes to differ
materially from those contained in any forward-looking statement made by or on
behalf of the company; any such statement is qualified by reference to the
following cautionary statements.
Each of the company's segments is subject to intense competition, changes in
consumer preferences and demand for its products, including diet trends, the
effects of changing prices for its raw materials and local economic and market
conditions. Their results are dependent upon their continued ability to promote
brand equity successfully, to anticipate and respond to new consumer trends, to
develop new products and markets, to broaden brand portfolios, to compete
effectively with lower priced products in a consolidating environment at the
retail and manufacturing levels and to improve productivity. The company's
results are also dependent on its ability to consummate and successfully
integrate acquisitions and to realize the cost savings and improved asset
utilization contemplated by its restructuring program. The company may, from
time to time, divest businesses that are less of a strategic fit within its
portfolio, and its results may be impacted by either the gains or losses, or
lost operating income, from the sales of those businesses. In addition, the
company is subject to the effects of foreign economies, changes in tax
requirements, currency movements, fluctuations in levels of customer inventories
and credit and other business risks related to its customers operating in a
challenging economic and competitive environment. The company's results are
affected by its access to credit markets, borrowing costs and credit ratings,
which may in turn be influenced by the credit ratings of Altria Group, Inc. The
company's benefit expense is subject to the investment performance of pension
plan assets, interest rates and cost increases for medical benefits offered to
employees and retirees. The company's assessment of the fair value of its
operations for purposes of assessing impairment of goodwill and intangibles is
based on discounting projections of future cash flows and is affected by the
interest rate market and general economic and market conditions. The food
industry continues to be subject to recalls if products become adulterated or
misbranded, liability if product consumption causes injury, ingredient
disclosure and labeling laws and regulations and the possibility that consumers
could lose confidence in the safety and quality of certain food products. The
food industry is also subject to consumer concerns regarding genetically
modified organisms and the health implications of obesity and trans-fatty acids.
Developments in any of these areas could cause the company's results to differ
materially from results that have been or may be projected by or on behalf of
the company. The company cautions that the foregoing list of important factors
is not exclusive. Any forward-looking statements in this press release are made
as of the date hereof. The company does not undertake to update any
forward-looking statement.
CONTACT: Kraft Foods Inc.
Perry Yeatman (Media),
847-646-1045
Perry.Yeatman@kraft.com
or
Chris Jakubik (Investor
Relations), 847-646-5494
Chris.Jakubik@kraft.com
SOURCE: Kraft Foods Inc.
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