Kraft Foods Inc. (KFT) Tuesday posted a 28 percent drop in quarterly profit, weighed down by restructuring and higher costs for cheese, coffee and other commodities.

The maker of Oreo cookies (search) and DiGiorno pizza (search) is in the midst of a three-year restructuring in which it is selling off brands and cutting 3,000 jobs to trim costs and focus on its top brands.

At the same time, the company has been hit by rising costs for everything from coffee to nuts, with commodity costs up $300 million in the quarter.

Fourth-quarter profit fell to $628 million, or 37 cents a share, from $869 million, or 50 cents a share, a year earlier.

Excluding one-time restructuring charges of $326 million, earnings were 49 cents a share, matching the average analyst forecast compiled by Reuters Estimates.

Kraft said it expected commodity prices to be neutral in 2005, as it recovers from a spike in cheese prices in 2004, and it forecast a 3.2 percent to 6.5 percent increase in 2005 earnings per share.

Quarterly sales rose 7 percent to $8.78 billion, beating the average analyst estimate of $8.63 billion.

The company, majority-owned by by Altria Group Inc. (MO), also forecast 2005 profit of $1.94 to $1.99 a share, excluding one-time items. Analysts on average forecast $1.97 a share, according to Reuters Estimates.

Including one-time items, the company forecast profit of $1.60 to $1.65 a share, compared with $1.55 in 2004.

Kraft expects to complete the sale of its yogurt and U.K. desserts businesses in the first quarter and its Life Savers and Altoids candy business in the second quarter.

Sales rose 8.8 percent to $5.8 billion in North America in the fourth quarter. But sales overseas were below expectations, falling 1.1 percent on a constant-currency basis.