CHICAGO – Kraft Foods Inc. (KFT) named Irene Rosenfeld as its new chief executive officer on Monday, replacing Roger Deromedi after a long period of sluggish results at the nation's largest food company.
Rosenfeld most recently was chairman and CEO of Frito-Lay, a division of PepsiCo (PEP).
Deromedi, a 28-year veteran of Kraft, had been sole CEO of the company since December 2003. He previously was co-CEO with Betsy Holden, who subsequently was removed and put in charge of global marketing.
The company said he mutually agreed with the board to leave to pursue other interests.
Deromedi had been under fire after an extensive restructuring had failed to produce the stronger sales and profits Wall Street expected.
The company, maker of Kraft cheese, Oreo cookies and DiGiorno pizza, is expected to be spun off soon by majority owner Altria Group Inc. Kraft Chairman Louis Camilleri, who also is Altria's CEO, indicated the CEO change was related to that impending action.
"While the fundamentals of the business continue to improve, we are confident that Irene will accelerate the execution of Kraft's growth strategy, build value for shareholders, and lead Kraft when it becomes a fully independent company," he said.
Rosenfeld spent more than 20 years with Kraft and General Foods before joining Frito-Lay in 2004. She departed Kraft in July 2003 as president of Kraft Foods North America, one of several key executives to leave as the company's struggles deepened.
The company credited her with leading the integration of the $19 billion Nabisco acquisition in 2000 and the restructuring and turnaround of a number of key businesses.
Camilleri said Deromedi charted a course for growth that will benefit Kraft for years to come. But Deromedi's ouster had been increasingly expected as the company failed to pull out of its slump.
The world's No. 2 food company behind Switzerland's Nestle SA has closed at least 19 plants and eliminated thousands of jobs since 2004 as part of a companywide overhaul. With sluggish sales like those of other packaged-food manufacturers, it also has been trying to accelerate a shift to healthier snacks and other items as part of the turnaround effort.
Deromedi said at a food conference in Paris last week that the company was halfway through divesting brands that account for approximately $1.7 billion in annual sales, which so far have included Life Savers and Altoids mints. He intended to sell brands representing 5 percent of its $34 billion in annual revenue.
Despite improvement in some areas, he acknowledged to analysts earlier this year that financial performance has been lagging and sales volumes remained flat.
Altria has been talking about a possible spinoff of Kraft since at least 2004, when Camilleri suggested that separating the company could benefit shareholders. Altria, which also is the parent of cigarette maker Philip Morris USA, has been waiting for court verdicts on tobacco litigation that should be resolved this summer.
Analyst Robert Campagnino of Prudential Equity Group LLC called it somewhat surprising that Deromedi's dismissal, while widely anticipated, came before the spinoff. He doesn't expect immediate benefits from a CEO switch.
"Unless new CEO Irene Rosenfeld can push commodity prices lower ... Kraft is still, in our view, a somewhat troubled company," he wrote in a note to investors.
Kraft shares rose 2 cents to $30.96 in late morning trading on the New York Stock Exchange. After plunging 21 percent last year, they have gained modestly this year but remain below the $31 price where the company went public in June 2001.
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