By Martinne Geller
NEW YORK (Reuters) - Kraft Foods Inc
"We are still looking for those so-called green shoots," said Tony Vernon, president of Kraft Foods North America, at a meeting on Wednesday with analysts.
With consumers still focused on value, Vernon said the environment in North America is likely to remain difficult, and that organic revenue growth for the next three years should range from 3 percent to 4 percent. Its historical norm is a range of 3 percent to 5 percent.
Kraft said the largest part of the $1 billion in incremental revenue opportunities it sees will come from its chocolate business, where it can use complementary distribution networks and technologies from Cadbury and Kraft to sell more products in more markets and boost revenue beyond the sum of both parts.
Overall, Kraft, which now generates more than half of its revenue outside North America, expects to generate organic revenue growth of 5 percent or more, margins in the mid- to high-teens and earnings per share growth of 9 percent to 11 percent, it said.
Kraft shares rose 30 cents, or 1 percent, to $31.35 on the New York Stock Exchange, while the wider Standard & Poor's 500 index <.SPX> was down slightly. Kraft shares have already gained nearly 12 percent since early July.
"Our turnaround phase is now over, and we've fully shifted our focus toward growth," said Chief Executive Officer Irene Rosenfeld at the meeting. She said Kraft is better poised for growth now that more than half of its portfolio is made up of snacks and more than half of its revenue is from outside North America.
Earlier this year, Kraft acquired UK-headquartered Cadbury for $18.4 billion after a hostile takeover battle, adding Cadbury chocolate, Trident gum and Halls lozenges to a portfolio that included Oreo cookies and Philadelphia cream cheese.
Kraft said on Wednesday that the integration of Cadbury was progressing well and that it was already taking advantage of technologies from each side of the business to improve its products. For example, the company is exploring the use of resealable plastic bags, like those used at Kraft, for Cadbury chocolates.
North America's largest food maker reiterated its cost-savings target of $750 million from the deal, as savings from procurement, manufacturing and logistics will drive productivity gains in excess of 4 percent of cost of goods sold.
Those gains, combined with flat overhead growth and increased prices to offset rising commodity costs, will contribute to higher gross profit margins, Kraft said.
By 2013, Kraft said the proportion of business in developing markets will increase from a quarter of total revenue to about one third.
(Additional reporting by Ben Klayman in Detroit, editing by Dave Zimmerman)
