Kraft Foods has reported a three-fold increase in quarterly profits – as the company passed the barrier of 90 per cent of acceptances from Cadbury shareholders in its takeover bid.
The US firms fourth-quarter results actually fell short of Wall Street expectations, despite seeing earnings rise from £114 million to £453 million.
Kraft reached a deal to buy Cadbury and create the world’s largest confectioner last month, after a drawn out hostile takeover.
Directors said the acquisition would lead to more growth, although investors said they would wait and see – especially since top Kraft investor Warren Buffett had opposed the transaction.
Meanwhile, the company will begin the compulsory acquisition of the remaining Cadbury shares after passing the 90 per cent barrier.
“The big test is what’s to come,” Morningstar analyst Erin Swanson said. “They face significant challenges in integrating Cadbury.”
Kraft also revealed that quarterly revenue rose 3.2 per cent to £7.05 billion, below the £7.07 billion predicted by analysts.
Analysts said Kraft was showing some traction in its overall cost-cutting strategy and its plan to lower prices in areas such as cheese that are heavily tied to commodity costs.
Organic revenue, which excludes currency moves and recent asset purchases and sales, rose 0.4 percent, hit by a decline in dairy costs that led the company to lower cheese prices.
Kraft Foods said on Monday had more than 90 per cent of acceptances from Cadbury shareholders in its takeover.
Kraft, after a prolonged battle for the company, said it would start a compulsory purchase of the remaining shares to close out the deal. The £11.8 billion takeover will create the world’s biggest confectionery group, following a near five-month takeover fight.