Kraft profit climbs 11 percent, raises full-year view

SAN FRANCISCO (Reuters) - Kraft Foods Inc reported a higher-than-expected 11 percent rise in quarterly profit on Tuesday as price increases, cost-cuts and people eating more food at home helped boost results.

The largest North American food maker also raised its full-year profit forecast, citing its strong performance so far this year and cost-cuts.

The results came after food makers General Mills Inc and Kellogg Co reported stronger-than-expected results and raised full-year forecasts in recent weeks. Kraft's shares, which have risen roughly 11 percent since the start of July, fell 2.1 percent in extended trading.

"Investors expected Kraft to probably beat expectations this quarter as well, and also raise their outlook," said Edward Jones analyst Matt Arnold of the stock's pullback in late trading.

He said the quarterly results show Kraft is gaining traction from the restructuring program it implemented in recent years.

The maker of Oreo cookies, Maxwell House coffee and a host of other well-known products said net income attributable to Kraft Foods rose to $827 million, or 56 cents a share, in the second quarter, from $745 million, or 49 cents a share, a year earlier.

Analysts, on average, forecast earnings of 54 cents per share, according to Reuters Estimates.

In recent years, Kraft has cut production costs while spending more on advertising and product development to help it garner higher prices and fend off competition from lower-priced store brands.

It has also focused its advertising on saving money for consumers, such as showing the difference between the cost of a DiGiorno frozen pizza and a restaurant pizza, or the lower cost of Kool-Aid versus soda.

Kraft said net revenue fell 5.9 percent to $10.2 billion, hurt by the impact of the stronger dollar, which lessens the dollar value of sales made overseas.

Organic revenue, a measure of sales that excludes currency fluctuations, acquisitions and divestitures, rose 2.9 percent, helped by higher prices.

Kraft said it now expects 2009 earnings per share to be "at least $1.93," up from an earlier view of $1.88 per share.

The company still expects 2009 organic net revenue growth of approximately 3 percent.

Its shares fell to $27.73 in extended trading after closing on the New York Stock Exchange at $28.34.

(Editing by Carol Bishopric and Steve Orlofsky)