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Kraft Foods, Northfield, Ill. USA, announced today that Michael A. Clarke, Executive Vice President and President, Kraft Foods Europe, will leave the company in mid-August 2011 to take a senior executive position with a U.K. based public company. Kraft Foods has named Timothy P. Cofer (42) as the successor to Clarke. Cofer will report to Chairman and CEO Irene Rosenfeld and will become a member of the Kraft Executive Team. He will be based in Zurich, Switzerland.
Kraft Foods also announced that the Board of Directors intends to create two independent public companies: A high-growth global snacks business with estimated revenue of approximately USD 32bn (approximately EUR 22.5bn) and a high-margin North American grocery business with an estimated revenue of approximately USD 16bn (EUR 11.2bn). The company expects to create these companies through a tax-free spin-off of the North American grocery business to Kraft Foods shareholders. Over the last few years, Kraft Foods has transformed its portfolio by expanding geographically and by building its presence in the fast-growing snacking category. A series of strategic acquisitions, notably LU biscuit from Danone and Cadbury Plc, together with strong organic growth of its Power Brands, have made Kraft Foods the world's leading snacks company. The company believes that creating two public companies will offer a number of opportunities:
- Each business would be able to focus on its distinct strategic priorities, with financial targets that best fit its own markets and unique opportunities.
- Each would be able to allocate resources and deploy capital in a manner consistent with its strategic priorities in order to optimize total returns to shareholders.
- Investors would be able to value the two companies based on their particular operational and financial characteristics and thus invest accordingly.
Global snacks will consist of the current Kraft Foods Europe and Developing Markets units as well as the North American snacks and confectionery businesses. As an independent company, global snacks would have estimated revenues of approximately USD 32bn and a strong growth profile across numerous fast-growing, attractive markets. Approximately 75% of revenues would be from snacks around the world, and approximately 42% would come from developing markets, including a diversified presence in numerous highly attractive emerging markets. The business would have a strong presence in the fast-growing and high-margin instant consumption channel. The non-snacks portion of the portfolio would consist primarily of powdered beverages and coffee, which have a strong growth and margin profile in developing markets and Europe. Key brands would include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee, and Tang powdered beverages.
The North American grocery business would consist of the current U.S. Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories in Canada and the Food Service. With approximately USD 16bn in estimated revenue, this business would be one of the largest food and beverage companies in North America. Its portfolio would include many of the most popular food brands on the continent, with leadership positions in virtually every category in which it competes.
Net revenues of Kraft Foods for the second quarter 2011 were USD 13.9bn (approximately EUR 9.8bn), up 13.3%, including a 2.1 percentage point benefit from accounting calendar changes. Organic net revenues grew 7.1 %, driven by robust growth in all geographies. Pricing, which accounted for 5.5 percentage points of growth, was up strongly in each geography as pricing actions announced earlier in the year continued to be implemented. Market share performance was solid despite the company's pricing actions. Volume/mix contributed 1.6 percentage points to growth, including approximately a 1.5 percentage point benefit from the shift of Easter-related shipments into the quarter. In Europe net revenues increased 26.2%, including a 6.3 percentage point impact from accounting calendar changes. Organic net revenues increased 6.4 %, including approximately a 2.5 percentage point benefit from the Easter shift. Power Brands grew nearly 8 %.