BOCA RATON, Fla., Feb. 21, 2012 /PRNewswire/ -- At the Consumer Analyst Group of New York (CAGNY) conference today, executives of Kraft Foods (NYSE: KFT) reviewed the company's 2011 results and updated its plans to create two world-class companies later this year.
"We delivered in 2011, and we'll deliver again in 2012," said Irene Rosenfeld, Chairman and CEO. "Our strong operating momentum provides a solid springboard as we prepare to launch two industry-leading public companies later this year."
Driving Sustainable Top-Tier Growth
All three of Kraft's regions – Europe, Developing Markets and North America – are benefiting from a virtuous cycle of growth. In 2011, net revenues grew 10.5% globally. Focused investments in Power Brands, up 8% , drove Organic Net Revenue growth of 6.6% .
Rosenfeld highlighted impressive growth in Developing Markets, where net revenues rose 16.2% . Power Brands grew 17% , driving Organic Net Revenue growth of 11.2% . Within Kraft Foods Europe, net revenues also grew strongly, up 14.9% . Power Brands grew 7% , fueling Organic Net Revenue growth of 4.6% – an eighth consecutive quarter of growth, despite the Eurozone crisis.
The virtuous cycle is also driving strong bottom-line performance. As announced earlier today, Kraft Foods delivered diluted earnings per share of $1.99 in 2011. Operating EPS was $2.29, which was up 13% , or 10% on a constant currency basis, from $2.02 last year. This improvement was driven primarily by operating gains of 25 cents.
Productivity improvements in procurement and manufacturing, integration synergies and overhead savings also generated cash to continue investments in innovation, quality and marketing. Globally, advertising and consumer spending increased about $250 million versus the prior year, while new products accounted for more than 10% of the company's revenues, up from 9% in 2010.
Building on Success in North America
North America President Tony Vernon, who will become CEO of the grocery company following the separation, said net revenues grew 5.1% in this region last year. Focused investments in Power Brands drove Organic Net Revenue growth of 4.8% . This performance outpaced most peers and drove Kraft's categories faster than the industry average. Higher revenue, coupled with improved productivity and lower overheads, provided the funds to continue investing in effective marketing and successful innovation. For example, new product revenue rose to 9% of total North America sales last year, up from 6.5% in 2009.
"Our momentum is palpable," Vernon said. "We have tremendous opportunities ahead to drive industry-leading results. With the foundation we're laying now, both our grocery and snack businesses will be well-positioned for success as stand-alone operations."