Kraft 'Ready to Unleash Global Snacking Powerhouse'

Execs unveil growth strategy for Mondelez spinoff

Published in CSP Daily News

Dave Brearton

NORTHFIELD, Ill. -- "With the spinoff of our North American grocery business, we're now ready to unleash a global snacking powerhouse that's poised to deliver top-tier revenue and earnings growth," Kraft Foods Inc. chairman and CEO Irene Rosenfeld said during a presentation at the Barclays Capital Back to School Consumer Conference on September 6.

She detailed the strategic growth priorities for Mondelez International Inc., the new global snacks company that will debut next month.

As previously announced, Kraft Foods plans to spin off its North American grocery business, to be named Kraft Foods Group Inc., on October 1. Following the spinoff, Kraft Foods Inc. will be renamed Mondelez International Inc.

"As our results show, we've significantly changed the trajectory of our business to deliver sustainable, profitable growth," Rosenfeld said.

She outlined the profile of Mondelez and how it is positioned to win in the marketplace, with competitive advantages such as leading positions in fast-growing categories, an advantaged geographic footprint with significant exposure to developing markets, a portfolio of world-favorite snacks brands, proven global innovation platforms, strong routes to market and world-class talent and capabilities.

The leaders of the company's Global Category Teams in Biscuits, Gum & Candy and Chocolate detailed several examples of how they are leveraging these competitive advantages in an integrated, cross-functional way to drive bigger, faster and more profitable growth.

Dave Brearton, executive vice president and CFO, highlighted the company's growth algorithm and financial targets. "Over the long term, we're targeting organic revenue growth of 5% to 7% and double-digit operating EPS growth on a constant-currency basis. These rates are higher than our previous long-term targets for Kraft Foods prior to the spin."

He added, "For 2013, we expect to deliver results that are consistent with our long-term profile, specifically, organic net revenue growth of 5% to 7% and operating EPS of $1.50 to $1.55, including a significant foreign exchange headwind of about 15 cents versus 2011 currency rates."

Brearton also updated estimates for transaction-related and restructuring costs. The company expects spinoff and debt-migration costs to be in line with earlier guidance; however, it expects restructuring costs at Mondelez International to be higher than earlier guidance, reflecting additional restructuring programs in the United States and Europe.

Northfield, Ill.-based Kraft Foods Inc. is a global snacks company with a portfolio of biscuits, confectionery, beverages, cheese, grocery products and convenient meals brands in approximately 170 countries, Kraft Foods had 2011 revenue of $54.4 billion; 12 of the brands-- Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident--generate revenue of more than $1 billion annually.

On Oct. 1, 2012, Kraft Foods Inc. will separate into two companies. Mondelez International Inc. will be a high-growth global snacks company with annual revenue of approximately $36 billion and several billion-dollar brands including Cadbury, Jacobs, LU, Milka, Nabisco, Oreo, Tang and Trident. The spinoff company, Kraft Foods Group Inc. will be a high-margin North American grocery company with annual revenue of approximately $19 billion and billion-dollar brands including Kraft, Maxwell House and Oscar Mayer.