What was the primary driver of the revenue increase in the first quarter of 2008?

The primary driver of the 20.8% increase in net revenues was the acquisition of the global biscuit business of Groupe Danone S.A. (Danone Biscuit) in November 2007. Favorable foreign currency exchange rates and higher net pricing also contributed significantly.

Why did earnings per share decrease despite the revenue growth?

Diluted EPS decreased by 7.0% primarily due to a substantial increase in interest and other debt expenses. This increase is largely attributable to the financing used for the Danone Biscuit acquisition, which required significant borrowings, including a bridge facility that was partially repaid by a new debt issuance in March 2008.

What is the status of the Post cereals business divestiture?

Kraft Foods Inc. has agreed to merge its Post cereals business with Ralcorp Holdings, Inc. through a 'Reverse-Morris Trust' transaction. The company has obtained necessary regulatory and tax rulings, and expects the transaction to be completed in mid-2008. This transaction will result in Kraft receiving approximately $960 million in cash-equivalent value, which will be used to repay debt.

How is the company addressing rising commodity costs?

The company is actively monitoring commodity costs, which increased significantly in Q1 2008, particularly for dairy, coffee, cocoa, and wheat. Kraft is implementing higher net pricing and seeking operational efficiencies to offset these rising input costs, as well as continuing its restructuring program to lower its overall cost structure.

MDLZ 10-Q Quarterly Report Q1 FY2008 — Revenue, Net Income, EPS

Summary

Mondelez International, Inc. (then Kraft Foods Inc.) reported a 20.8% increase in net revenues to $10.4 billion for the first quarter of 2008, driven by the acquisition of Danone Biscuit, favorable foreign currency, and price increases. However, diluted earnings per share (EPS) saw a decline of 7.0% to $0.40, primarily due to a significant increase in interest and other debt expenses related to the Danone Biscuit acquisition financing. The company is actively managing its portfolio through restructuring programs, including workforce reductions and facility optimization, which incurred $98 million in charges during the quarter. A notable strategic move is the planned merger of its Post cereals business with Ralcorp Holdings, Inc., expected to be completed mid-2008, which will provide approximately $960 million in cash-equivalent value to repay debt. The company reaffirms its diluted EPS guidance of at least $1.56 for the full year 2008, while acknowledging ongoing cost pressures, particularly from commodities.

Key Highlights

1Net revenues increased by 20.8% to $10.4 billion, significantly boosted by the recent acquisition of Danone Biscuit and favorable foreign currency movements.
2Diluted Earnings Per Share (EPS) decreased by 7.0% to $0.40, impacted by higher interest expenses related to acquisition financing.
3The company incurred $98 million in Restructuring Program charges as it continues to optimize its cost structure and operations, including workforce reductions.
4Mondelez International (Kraft Foods Inc.) issued €2.85 billion ($4.50 billion) in senior unsecured notes to repay a portion of the bridge facility used for the Danone Biscuit acquisition.
5A significant divestiture is planned, with the Post cereals business expected to merge with Ralcorp Holdings, Inc. in mid-2008, generating approximately $960 million in cash-equivalent value.
6Share repurchases continued, with $650 million spent in Q1 2008 under the $5.0 billion program, and $850 million remaining as of March 31, 2008.
7Commodity costs saw a significant increase, with an estimated $460 million rise compared to the prior year's first quarter, driven by dairy, coffee, cocoa, and wheat.

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2008

Summary

Key Highlights

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