Kraft Lays Down Strategies for Growth
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.
21/02/07 Irene Rosenfeld, CEO of Kraft Foods Inc. has announced a comprehensive strategy to accelerate the company's growth at the Consumer Analyst Group of New York conference in Scottsdale, Arizona. 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 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."
