NORTHFIELD, Ill. -- Irene Rosenfeld, CEO of Kraft Foods Inc., announced a comprehensive strategy to accelerate the company's growth at the Consumer Analyst Group of New York conference in Scottsdale, Ariz. The company also provided 2007 earnings guidance and its long-term financial outlook.
"This is a pivotal time in Kraft's history, and while there are things we have to fix, our organization is energized about pursuing a number of trajectory-changing initiatives," said Rosenfeld. "I am confident that our new strategies will return Kraft to predictable [image-nocss] and consistent growth."
The company's four strategies are:
Rewire the organization for growth. Reframe Kraft's categories to make them more relevant to consumers. Exploit Kraft's sales capabilities. Drive down costs without compromising quality.The company expects a return to consistent growth in three stages. In 2007, Kraft expects to:
Grow its top line 3% to 4% organically; Invest all of its growth, as well as restructuring savings, back into the first wave of trajectory-changing growth initiatives. This represents an incremental $300 million to $400 million investment in quality, marketing, R&D and capability-building.As a result of this investment, a higher tax rate, spin-related dilution and divestitures (included in Kraft's fourth quarter 2006 earnings release), in 2007 Kraft expects earnings per share of $1.50 to $1.55, or $1.75 to $1.80, excluding 25 cents of restructuring costs.
In 2008, the company expects its operational turnaround to gain momentum. Kraft will again grow revenue 3% to 4% organically, with operating income exceeding revenue growth. The company will invest a portion of its growth back into the business, including further marketing spending, toward a long-term target of 8% to 9% of net revenue.
"By 2009, we'll hit our stride," Rosenfeld said. "We'll fully realize the financial benefits of our investments and deliver our long-term targets of at least 4% organic net revenue growth and 7% to 9% EPS growth."
Kraft Foods, Northfield, Ill., is one of the world's largest food and beverage companies. Brands include Kraft cheeses, dinners and dressings; Oscar Mayer meats, DiGiorno pizzas, Oreo cookies, Ritz crackers and chips, Philadelphia cream cheese, Milka and Cote d'Or chocolates, Planters nuts, Honey Bunches of Oats cereals, Jacobs, Gevalia and Maxwell House coffees; Capri Sun, Crystal Light and Tang refreshment beverages; and a growing range of South Beach Diet and better-for-you Sensible Solution options.
Click here to view a PDF of the presentation.
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