By Martinne Geller
NEW YORK (Reuters) - Kraft Foods Inc
Chief Executive Irene Rosenfeld said the business environment for the company will "remain challenging" in 2011, echoing comments from PepsiCo
Both food and beverage companies face rising costs for commodities like grains, while consumers are still pinching pennies in many developed markets, making it difficult for companies to raise prices aggressively.
"We believe Kraft will comfortably price up to the cost inflation in 2011, but we do expect a lag in the early part of the year," Stifel Nicolaus analyst Chris Growe said in a note to clients.
PepsiCo cut its earnings growth forecast earlier on Thursday and its shares closed down 1.7 percent. Kraft shares were down 1.2 percent at $30.71 in after hours trading, after closing down 13 cents at $31.11 on the New York Stock Exchange.
Kraft, the maker of Maxwell House coffee, Oreo cookies and Velveeta cheese, said fourth-quarter net income was $540 million, or 31 cents per share, down from $710 million, or 48 cents per share, a year earlier.
Excluding costs related to the acquisition, Kraft earned 46 cents per share, meeting analysts' average estimate, according to Thomson Reuters I/B/E/S.
Sales jumped 30 percent to $13.77 billion, due mostly to the addition of Cadbury, which brought Cadbury chocolate, Trident gum and Halls lozenges to Kraft's portfolio. Analysts expected $13.47 billion.
Kraft also said it expected growth of about 4 percent in "organic" revenue in 2011, excluding the impact of a 53rd week in this year's reporting calendar, and operating earnings growth of 11 percent to 13 percent. The company's previous earnings forecast called for mid-teens growth.
Organic revenue excludes currency moves and recent asset purchases and sales.
(Reporting by Martinne Geller; Editing by Steve Orlofsky)
