Summary Of Kraft's Fourth Quarter Earnings Conference

held their fourth quarter earnings conference call on Thursday, and issued positive forward looking guidance. CEO Tony Vernon started off reporting some of the key revenue metrics: • Kraft delivered 3.2 percent organic growth top-line revenue growth in the fourth quarter, Vernon stated that this was, “well above the 0.6 percent growth for the North American food and beverage industry and consistent with our guidance.” CEO Vernon also offered two very important aspects about the future of Kraft: • “Excluding the noise from the spin-related comparisons and our extraordinary pruning, our base business volume mix growth was solid and this occurred in a quarter where our industry faced a number of headwinds, from SNAP reductions to a tight window between Thanksgiving and other holidays at the end of the year.” • “We lagged industry growth on a dollar basis due to pricing at several of our categories mainly nuts and coffee, the price is down during the year, in line with lower input costs.” Vernon then shifted gears to explaining not only the fourth quarter revenue, but to explain the full-year revenue performance, which was very interesting. Below are key metrics for not only the United States, but for Canada as well. • “We expected that our focus on profitable growth would hold back our top-line growth versus industry in 2013. What's most interesting, however, is that the major disparity between our organic growth and industry growth was due to pricing.” • Canada, where our team north of the border had an outstanding year, outgrowing their categories by a wide margin and delivering strong innovation-driven top-line growth and more than 20 percent bottom-line growth.” • “During the 52 weeks of 2013, roughly two-thirds of our businesses were holding or growing market share, up from only 40 percent one year ago.” • “For Kraft, this means a shift in revenue and quite high margin revenue of about $150 million into the second quarter of 2014 versus what occurred in the first quarter of 2013.” Next up was Chief Financial Officer Teri List-Stoll. The CFO talked about topics from 2014's guidance to the current quarter. • “For the full year, earnings were above the guidance we provided at the end of October even after taking out the significant benefit from market-based impacts to our post-employment benefit plans.” • The CFO clearly defined what really drove up their performance, “As we look at the earnings bridge, we saw a significant contribution from the growth in earnings from operations. This is consistent with our expectations and was a big contributor for both the fourth quarter and the year. The upside versus our guidance was primarily driven by two factors: lower that expected spending on restructuring and a lower than expected effective tax rate.” • “I mentioned earlier that we spent roughly $290 million on our restructuring program in 2013. We said in the past that our ongoing rate of spending on cost savings initiatives should be in the $125 million range.” This Ended the earnings transcript, on a very upbeat note: • “Nobody likes to operate in this type of environment and we're not yet firing on all cylinders. But I will say this, we have an obligation and a real opportunity to innovate and contemporize our brands to meet the constantly evolving needs of all Americas' families, the emerging and growing cohorts of millennials and Hispanic consumers, our economically-strapped consumers in this barbell economy and those consumers seeking more options in nutrition and wellbeing.”