Kraft warns on price increases

Kraft Foods claims that the strength of brands such as Kenco, Philadelphia and Dairylea will help it pass on the price increases necessary to offset rising commodity costs.

Philadelphia

In the company’s fourth quarter earnings statement, Kraft warned that “significant input cost inflation and persistent consumer weakness” could hit sales this year.

Kraft has already raised prices in Europe and North America and further increases are expected later this year to mitigate commodity inflation.

The company’s net profit for the three months to 31 December fell 24% to $540m (£335m) because of administrative costs related to integrating Cadbury into the business.

The £11.5bn acquisition, however, helped lift revenue in the quarter 30% to $13.8bn (£8.6bn), the company says.

Irene Rosenfeld, chief executive of Kraft, says: “Looking ahead, we expect the operating environment to remain challenging, with significant input cost inflation and persistent consumer weakness in many markets. Given our strong business fundamentals, however, we remain confident that we will deliver earnings growth in 2011 that’s both ahead of our long-term targets and within the top tier of our peer group.”

Food and drink company PepsiCo also warned yesterday (11 February) that rising prices will hit sales.

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