CHICAGO (Reuters) - Kraft Foods Inc. (KFT) on Monday posted lower-than-expected sales growth due to weak sales of salad dressing and bottled beverages, dragging its stock down despite an 11 percent increase in quarterly profit.
The company also raised its earnings outlook for the year, but only due to the expected gain from the sale of its Minute Rice brand.
The maker of Oreo cookies, Maxwell House coffee and Kraft cheese posted a profit of $748 million, or 45 cents a share, in the third quarter, compared with $674 million, or 40 cents, a year earlier.
Excluding items, Kraft earned 46 cents a share, compared with Wall Street analysts' average estimate of 45 cents a share, according to Reuters Estimates.
Revenue rose 2.3 percent to $8.24 billion. Analysts had been expecting revenue of $8.26 billion, according to Reuters Estimates. Volume, a measure of goods sold, fell 1.9 percent.
The company's sales were hurt by a 9 percent decline in North American ready-to-drink beverages like Fruit2O water and by consumers shying away from salads amid a massive recall of spinach due to deadly e.coli bacteria and a smaller recall of lettuce.
"This has been a tough year for salad dressings because of all the consumer news in lettuce and spinach," Irene Rosenfeld, chief executive, said in an interview. She added that "ready-to-drink (beverage) has been a competitive area and we have just not had the performance we expected."
Kraft has been in the process of closing plants and cutting jobs in order to rein in costs amid higher prices for energy, wheat and other commodities. It has also sold off some brands to focus on products like cookies, beverages and South Beach Diet meals.
The results come as analysts and investors await an announcement from Kraft's parent, Altria Group Inc., on when it plans to spin off the rest of Kraft's stock and word from new Kraft Chief Executive Irene Rosenfeld about her strategy for running the largest North American food company.
Rosenfeld declined to comment on specifics of her strategy for the company, saying she will talk more about her plans early next year.
But she did say that the company would be ready to be spun off by Altria when the parent company decides to split Kraft and its Philip Morris tobacco businesses. Altria management has not said when the spinoff will happen, saying it is waiting for the U.S. legal environment in the tobacco business to improve.
"I am highly confident that whenever and if Altria decides to spin off Kraft, we will be ready," Rosenfeld said.
Kraft raised its full-year earnings outlook to between $1.86 and $1.89 a share due to gains from the sale of its Minute Rice brand and its interest in United Biscuits. In July, the company boosted its forecast to $1.78 to $1.83 a share.
Kraft shares were down 4 percent at $34.80 in extended trade Monday afternoon following the earnings release, after closing up 2.3 percent at $36.30 on the New York Stock Exchange.
As of Friday's close, Kraft shares were up 28.6 percent this year, compared with a 10 percent increase of the Standard & Poor's Packaged Foods index.
NEW YORK (Reuters) - Texas Instruments Inc. (TXN), the world's biggest maker of cell phone chips, Monday gave a disappointing outlook for the fourth quarter after third-quarter revenues missed Wall Street estimates.
The news pushed down TI's shares by 1.7 percent in post-market trading.
TI, which makes everything from calculators to chips for the latest flat screen televisions, forecast earnings per share from continuing operations at 40 cents to 46 cents for the fourth quarter, on revenue of $3.46 billion to $3.75 billion.
On average, analysts were expecting fourth-quarter earnings of 45 cents a share on revenue of $3.8 billion, according to Reuters Estimates.
"No one thing stood out as the main culprit but when you add it all together it's a little bit of a disappointment," said American Technology Research analyst Doug Freedman, who had expected some weakness in revenue.
TI said third-quarter revenue rose to $3.76 billion from $3.59 billion, which was less than the $3.796 billion average forecast from analysts surveyed by Reuters Estimates.
Profit from continuing operations was 45 cents a share in the third quarter, up from 36 cents a share in the year-earlier quarter and in line with Wall Street expectations.
Dallas, Texas-based TI's shares have risen more than 17 percent in the last three months compared with a 16 percent increase for the Philadelphia Stock Exchange's index of semiconductor companies in the same period.
TI's shares fell nearly 3 percent in aftermarket trade before recovering to trade at $31.35, still down from their New York Stock Exchange close of $31.88.
TI said its gross profit margin for the quarter was 51.4 percent. It had reported a 51.6 percent gross margin for the second quarter and 49.3 percent in the year-ago quarter.
DEARBORN, Mich. - Ford Motor Co. (F) said Monday its loss widened to $5.8 billion in the third quarter, weighed down by the costs of its massive restructuring plan aimed at cutting its expenses so it can compete better against lower-cost rivals from overseas.
Ford's new Chief Executive, Alan Mulally, called the latest results "clearly unacceptable."
The nation's second biggest automaker also said it plans to restate its earnings for 2001 due to accounting errors involving derivative transactions. The restatement is expected to effect financial results from 2001 until the third quarter of this year.
The company expected the restatement would improve results for 2002, but said other periods are under study.
Ford's net loss of $3.08 per share for the July-September period was larger than last year's third-quarter loss of $284 million, or 15 cents per share.
Excluding restructuring costs, the company said it lost $1.2 billion, or 62 cents per share, from continuing operations. Excluding special items in the third quarter of last year, Ford lost $191 million, or 10 cents per share.
Wall Street had been expecting a loss of 61 cents per share for the quarter, according to a survey of analysts by Thomson Financial.
"We are committed to dealing decisively with the fundamental business reality that customer demand is shifting to smaller, more efficient vehicles," Mulally said in a statement. "Our focused priorities are to restructure aggressively to operate profitably at lower volumes, and to accelerate the development of new, more efficient vehicles that customers really want.
Dearborn-based Ford's turnaround plan aims to cut $5 billion in costs by the end of 2008 by slashing 10,000 white-collar workers and offering buyouts to all of its 75,000 unionized employees.
The loss including restructuring costs was Ford's largest since the fourth quarter of 1992 of $8.1 billion, which was due mainly to accounting changes.
Ford said special charges for the third quarter of 2006 totaled $5.26 billion before taxes. The charges included $2.2 billion to re-value assets in North America and $1.6 billion to decrease the value of Jaguar and Land Rover assets.
Ford also took at $861 million charge for jobs bank benefits and employee separations due to its plans to idle factories in North America, a $259 million charge for continued global personnel reduction and a $437 million charge for the cost of employee retirements that occurred earlier than planned.
The company also reported a $99 million gain due to the release of a reserve from excise taxes in South America due to a recent court ruling.
NEW YORK (Reuters) - AT&T Inc. (T) said on Monday its third-quarter profit rose more than expected, helped by growth in its Internet and mobile phone services as well as merger-related cost cuts.
The biggest U.S. telephone company said net profit excluding merger-related costs and other items rose to 63 cents per diluted share in the third quarter compared to 47 cents in the same quarter a year earlier.
Analysts polled by Reuters Estimates, on average, expected earnings of 58 cents a share before items.
The company also said its net income was $2.4 billion excluding items, up 58.2 percent from $1.5 billion a year ago.
Excluded were costs related to SBC Communications Inc.'s acquisition of AT&T Corp. last November, and costs from Cingular Wireless' acquisition of AT&T Wireless in the fourth quarter of 2004.
"Wireless delivered impressive margin expansion along with strong subscriber and revenue growth. Enterprise demand and revenue trends continue to be promising," said Edward Whitacre Jr., AT&T chairman and chief executive.
Mobile phone company Cingular, which AT&T owns with BellSouth Corp. (BLS), said last Thursday its third-quarter profit nearly quadrupled on stronger-than-expected subscriber growth and savings from its integration of AT&T Wireless.
AT&T's consolidated revenue, which does not include those from Cingular, totaled $15.6 billion, up from a pre-merger $10.3 billion in the third quarter of 2005.
AT&T is awaiting final government approval for its merger with BellSouth, which is seen bolstering its position as the nation's biggest service provider.
NEW YORK (Reuters) - Xerox Corp.(XRX), one of the world's biggest makers of office printers, on Monday said quarterly profit rose sharply, boosted by improved sales of color printers and supplies and a tax-related gain.
Xerox reported third quarter net income of $536 million, or 54 cents a share, from $63 million, or 5 cents a share one year ago.
Excluding one-time items the profit was 23 cents a share, beating analysts' average expectations of 22 cents, according to Reuters Estimates.
The quarterly profit included 45 cents a share from a tax benefit, which was partially offset by restructuring and litigation charges totaling 14 cents a share.
Revenue rose 2 percent to $3.84 billion. Analyst had expected revenue of $3.81, according to Reuters Estimates. Sales from supplies and services — also known as post-sale revenue — rose 4 percent, fueled by growth in demand for paper and color printers.
The Stamford, Connecticut, company in recent years has successfully introduced digital printers and office systems, but has struggled to boost revenue amid pricing pressures from rivals such as Canon Inc. and Hewlett-Packard Co. (HPQ) Xerox has said that over time, it expects digital sales to yield higher margin profits.
Xerox stock closed on Friday at $16.00 on the New York Stock Exchange. The stock has climbed about 19 percent since Xerox last reported quarterly earnings, and earlier this month the stock hit an 18-month high.
CHICAGO (Reuters) - Kimberly-Clark Corp. (KMB), the maker of Kleenex tissues and Huggies diapers, posted a higher third-quarter profit on Monday, as its restructuring helped offset higher costs for fiber and other materials.
Profit was $364.2 million, or 79 cents per share, compared with a profit of $325.3 million, or 68 cents per share a year earlier.
The company is 15 months into a restructuring plan that includes cutting 6,000 jobs as it works to improve its diaper and health-care businesses and expand in emerging markets.
Before items, the Dallas-based company earned 99 cents per share. On that basis, analysts had an average estimate of 98 cents, according to Reuters Estimates.
Kimberly-Clark's shares rose 6 percent during the third quarter, while the six-company S&P Household & Personal Products Index, which includes Kimberly-Clark, rose 8.9 percent.
The shares trade at 15.7 times Kimberly-Clark's expected profit for next year. Shares of Colgate-Palmolive Co. (CL), which is further along in its restructuring, trade at nearly 18.7 times expected 2007 earnings, according to Reuters data.