PORTLAND, Ore. (AP) -- Kraft Foods Inc. reported a 22 percent jump in its third-quarter profit, boosted by higher prices on some of its products that helped offset increased costs for everything from ingredients to packaging.
The company based in Northfield, Ill., whose brands include Nabisco, Maxwell House and Trident, raised its full-year profit forecast Wednesday based on the results.
Kraft, like the rest of the food and beverage industry, is coping with higher costs at a time when consumers in developed markets like the U.S. are limiting spending.
The company has been able to offset this pressure by raising prices on select products and expanding in emerging markets such as China, India and Brazil where demand is growing. It also has grown with help from Cadbury PLC, which it acquired in 2010, as candy and other sweets sales have soared.
"Our investments in marketing and new products continue to drive high quality growth and solid market shares," said CEO Irene Rosenfeld. "And we've accomplished this despite having taken significant price increases to offset record-high input costs."
The company reported after the market closed that it earned $922 million, or 52 cents per share, for the quarter that ended Sept. 30. That's up from $754 million, or 43 cents per share, last year. After adjusting for integration costs related to its acquisition of Cadbury and other special items, it earned 58 cents per share versus 47 cents per share in the prior period.
Kraft's revenue rose nearly 12 percent to $13.23 billion.
The company also benefited from a lower tax rate and favorable foreign exchange rates during the period.
Kraft beat analyst expectations of adjusted net income of 55 cents a share on revenue of $12.8 billion, according to data from FactSet.
Kraft said its revenue grew across all its markets on higher prices and stronger sales of its core products such as Oreo cookies and more recent product additions such as Trident gum.
In North America, revenue increased 4.4 percent as new products and higher prices offset softer sales volume in its biggest market.
While it has sacrificed some sales volume in the U.S. due to higher prices, the company said it plans to find new ways to grow in this market. These include promoting its core brands, such as Macaroni and Cheese, while appealing to today's consumer with offerings including smaller, lower-priced gum packets.
In Europe, Kraft's revenue rose more than 16 percent, helped by higher coffee prices and stronger sales volume. But the standout for the quarter was in developing markets, such as India and Brazil, where the company's revenue increased more than 20 percent on stronger sales and higher prices.
Kraft also raised its outlook for full-year 2011 net income. It now expects to earn $2.27 per share, in line with analyst expectations and up from its prior forecast of $2.25 per share.
Revenue is expected to increase 6 percent, up from its prior forecast of a 5 percent increase.
The company said it does expect commodity prices to continue to increase in the coming year. It has price increases planned for the fourth quarter but is waiting to see how commodity prices change before making plans for any plans for price hikes in 2012.
"There's no question that the consumer environment remains difficult and input costs remain high for everybody, neither is likely to change anytime in the near future," Kraft's Chief Financial Officer Dave Brearton told investors. "Despite that, we are encouraged by the operating momentum we're seeing across our company."
The company is in the process of splitting its business into two publicly traded companies. One will focus on its international snack brands like Trident gum and Cadbury chocolates while the other will concentrate on its North American grocery business that includes Maxwell House coffee and Oscar Mayer meats. The deal is expected to be complete at the end of next year.
Kraft said Wednesday that the grocery business will retain the Kraft Foods name and that a name for the snack business has yet to be determined but will be up for a vote at its shareholder meeting in May. The company also expects to announce the leadership for each company by the end of this year.
While the company beat expectations for the quarter and raised its outlook for the year, investors reacted mildly. Kraft's shares rose 21 cents to $34.85 in after-hours trading on the news.
Edward Jones analyst Matt Arnold said the muted response may have been because the quarter, while respectable, beat expectations in part due to more favorable currency exchange rates and lower taxes than expected, not operating fundamentals.
"There are plenty of things to like," Arnold said. "All in all though, most elements progressed as expected."
Copyright 2011 The Associated Press.