Kraft Foods Group (NASDAQ:KRFT) edged up Friday as the company reported quarterly results that missed analyst views on greater-than-expected trade inventory reductions, but it raised its profit outlook for 2013 due to a gain from a change in post-employment benefit accounting.
The company said its new strategy for post-employment benefits is designed to improve transparency, simplify accounting, and reduce funding volatility.
For the fourth quarter, the company reported a profit of $89 million, or 15 cents a share, down from $319 million, or 54 cents a share, a year earlier.
The latest quarter included $225 million of market-based impacts from post employment benefits, as well as $135 million of restructuring charges and losses from hedging.
Revenue dropped 11% to $4.49 billion, while organic revenue, which excludes acquisitions, sales and currency effects, fell 7.2%.
Organic revenue declined due to a negative 6.8 percentage point impact from reductions in trade inventories, as well as a 1.2 percentage point impact from product pruning.
Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 23 cents on revenue of $4.74 billion.
"We continue to make important changes to re-make Kraft into an industry leader that delivers steady, growing shareholder returns," said CEO Tony Vernon.
"While we weren't satisfied with our revenue in the fourth quarter, our innovation, productivity and overhead cost reduction programs are paying off. This enabled a double-digit increase in advertising, solid profit from operations and sizable cash flow."
Kraft Foods Group now consists of the North American grocery business of the former Kraft Foods Inc., which spun off its global snacks business in October to create Mondelez International Inc. (MDLZ).
The company--whose brands include Maxwell House, Oscar Mayer and Kraft cheese--had previously warned that net sales would be flat to down in its fourth quarter as retailers loaded up on inventory ahead of its split from Mondelez.
Looking ahead, Kraft updated its outlook for 2013, with earnings per share now expected to be $2.75, up from its previous guidance of $2.60, reflecting an anticipated non-cash benefit of around 22 cents per share from the company's change in post-employment benefit accounting, and a 7-cent-per-share increase in expected restructuring costs.
The higher restructuring costs are due to a shift in expenses from 2012 to 2013.
The company also said it expects organic revenue growth for the year to be in line with the growth of the North American food and beverage market, despite a negative one percentage point impact from product pruning.
Shares rose slightly by 0.2% in New York this morning to $47.25.