Kraft reported that fourth-quarter 2004 earnings were $0.37 per share, including restructuring and impairment charges of $0.12 per share, down from $0.50 per share in the fourth quarter of 2003. Full-year earnings, meanwhile, came in at $1.55 compared with $2.01 in 2003. Top-line results were more encouraging: In constant currency, full-year revenue rose 3.2%, while fourth-quarter revenue increased 4.9%. These gains were no doubt driven in part by price increases designed to offset higher commodity expenses, but the fourth quarter may provide some sign that the firm's various initiatives are beginning to pay off.
Fourth-quarter revenue was not up across the board. Though North American results were robust, rising 8.1% in constant currency, the international sphere was disappointing. Accounting for currency changes, revenue in this area was down 1.1%. What's more, this segment seems to have room to grow, since just about a third of sales are from overseas.
Still, the company may already be on its way to improving its international prospects. Kraft's enhanced nutritional labeling and self-imposed restrictions on advertising to children fit well with the thinking currently coming out of the European Union. This should position the company well as it goes head-to-head in the EU with rivals such as General Mills
Kraft continues to transition to a leaner company, a process that is likely to continue for some time. As it seeks to chart out a path for growth, though, international sales have to be part of its agenda.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.