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Kraft Foods' Q2: 'Steady Progress'

NORTHFIELD, Ill. -- Kraft Foods Inc., here said yesterday that profits for its second quarter were up 44 percent from a year ago, buoyed by what it said was "steady progress" overall including a "favorable product mix, the benefits of a strong increase in advertising, and continued cost savings results" from an ongoing restructuring.

The company said sales rose 3.4 percent to $8.6 billion from $8.3 billion, which bettered the expectations of analysts. Excluding acquisitions, Kraft said revenue grew 4.9 percent, led by double-digit gains in Eastern Europe and Latin America, and with solid growth in North America.

Unit volume edged up almost of full percentage point, including increases in Oscar Mayer meats and Maxwell House coffee.

Net earnings for the three months ended June 30, meanwhile, were $682 million, or 41 cents per share, up 44 percent from $472 million, or 28 cents per share, in the year-ago period.

Results included 10 cents per share related to the closing of three manufacturing facilities, and ongoing cost cuts as part of a restructuring. Excluding those items, earnings were 3 cents better analysts' estimates.

On June 26, the company replaced Roger Deromedi as chief executive with Frito-Lay's c.e.o. Irene Rosenfeld, in the midst of Wall Street grumbling over the sluggish pace of the restructuring.

"Second-quarter results reflect further improvements in Kraft's business fundamentals," said Rosenfeld. "We're making good progress focusing and strengthening the portfolio, which will set the stage for accelerating our growth."
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