Kraft 2001 Annual Report Download - page 37

Kraft Foods Inc.
31
Kraft Foods International (continued)
(in millions)
Year Ended December 31, 2001 2000 1999
Reported operating
companies income:
Europe, Middle East and Africa $ 861 $1,019 $ 895
Latin America and Asia Pacific 378 189 168
Total reported operating
companies income 1,239 1,208 1,063
Gain on sale of a French
confectionery business:
Europe, Middle East and Africa (139)
Operating companies income of
businesses sold:
Europe, Middle East and Africa (32) (52)
Latin America and Asia Pacific (1) (3) (4)
Estimated impact of century
date change:
Europe, Middle East and Africa 8(8)
Latin America and Asia Pacific 5(5)
Underlying operating
companies income 1,238 1,047 $ 994
Nabisco operating companies income:
Europe, Middle East and Africa 1
Latin America and Asia Pacific 93
Pro forma operating
companies income $1,238 $1,141
2001 compared with 2000
KFI’s reported volume for 2001 increased 34.4% over 2000, due
primarily to the acquisition of Nabisco. On a pro forma basis,
volume for 2001 increased 3.5% over 2000. Excluding the 53rd
week of shipments in 2000, volume increased 4.7%, benefiting from
gains across most consumer sectors and driven by continued
growth in the developing markets of Central and Eastern Europe,
Latin America and Asia Pacific.
During 2001, reported operating revenues increased $698 million
(8.6%) over 2000, due primarily to the acquisition of Nabisco ($1.2
billion) and the shift in CDC revenues ($26 million), partially offset by
unfavorable currency movements ($460 million) and the revenues
of divested businesses ($148 million). On a pro forma basis,
operating revenues decreased 4.0%, primarily reflecting unfavorable
currency movements.
Reported operating companies income for 2001 increased $31
million (2.6%) over 2000, due primarily to the acquisition of Nabisco
($128 million), lower marketing, administration and research costs
($119 million) and the shift in CDC income ($13 million), partially
offset by the gain on the French Confectionery Sale in 2000 ($139
million), unfavorable currency movements ($51 million) and income
of divested businesses ($34 million). On a pro forma basis, which
does not include the French Confectionery Sale in 2000, operating
companies income increased 8.5%.
The following discusses operating results within each of KFI’s
reportable segments.
Europe, Middle East and Africa: Reported and pro forma
volume for 2001 decreased slightly from 2000, due primarily to
the 53rd week of shipments in 2000. Excluding the 53rd week of
shipments in 2000, volume increased 1.3%, due primarily to volume
gains in the developing markets of Central and Eastern Europe and
growth in many Western European markets, partially offset by lower
volume in Germany, reflecting increased price competition and
trade inventory reductions, and lower canned meats volume in Italy.
In beverages, volume increased in both coffee and refreshment
beverages. Coffee volume grew in many markets, driven by new
product introductions and recent acquisitions in Romania, Morocco
and Bulgaria. In Germany, coffee volume increased despite trade
inventory reductions. Refreshment beverages volume increased,
driven by higher sales to the Middle East. Snacks volume
increased, driven by confectionery and salty snacks, particularly in
Central and Eastern Europe. Snacks volume in Germany was lower
due to increased price competition and trade inventory reductions.
Cheese volume increased due primarily to Philadelphia cream
cheese growth across the region, partially offset by lower volume
in Germany. In convenient meals and grocery, volume declined as
lower canned meats volume in Italy and a decline in grocery
volume in Germany were partially offset by higher shipments of
lunch combinations and pourable dressings in the United Kingdom.
Reported operating revenues for 2001 decreased $485 million
(7.1%) from 2000, due primarily to unfavorable currency movements
($251 million), revenues from divested businesses ($131 million),
lower pricing ($123 million, primarily commodity-driven coffee price
decreases) and lower volume/mix ($69 million), partially offset by
the acquisition of Nabisco ($46 million), the 2001 acquisitions of
coffee businesses in Romania, Morocco and Bulgaria ($29 million)
and the shift in CDC revenues ($14 million). On a pro forma basis,
operating revenues decreased 6.1%, reflecting unfavorable currency
movements and commodity-related coffee price decreases.
Reported operating companies income for 2001 decreased $158
million (15.5%) from 2000, due primarily to the gain on the French
Confectionery Sale in 2000 ($139 million), unfavorable currency
movements ($19 million), income from divested businesses ($32
million), lower volume/mix ($12 million) and unfavorable margins
($16 million), partially offset by lower marketing, administration and
research costs ($50 million) and the shift in CDC income. On a pro
forma basis, operating companies income increased 0.5%.
Latin America and Asia Pacific: Reported volume for 2001
increased more than 100% from 2000, due primarily to the
acquisition of Nabisco. On a pro forma basis, volume for 2001
increased 9.6% over 2000. Excluding the 53rd week of shipments
in 2000, volume increased 9.9%, due to gains across most
consumer sectors. Beverages volume increased, due primarily to
growth in refreshment beverages in Latin America and Asia Pacific,
and coffee in Asia Pacific. Cheese volume increased due primarily
to cream cheese and process cheese. Grocery volume was higher,
due primarily to new product introductions. Snacks volume
increased, driven primarily by new biscuit product introductions