Kraft 2002 Annual Report Download - page 25

In Kraft Foods’ 100th year, we once again delivered on our commitments, relying on
the same enduring values that have inspired a century of growth.
Despite the marketplace challenges of 2002, including a weak global economy,
volatile commodity prices and significant economic uncertainty in Latin America, we
achieved strong results. Volume grew 3.1%, operating companies income increased
5.5% to $6.4 billion, net earnings increased 15.2% to $3.5 billion and diluted earnings
per share grew 15.4% to $2.02.
Around the world, our success is built on two key strengths — the best brands
and the best people.
And in 2002, this powerful combination of innovation and talent produced another
year of accomplishment:
•New products generated $1.1 billion in net revenues.
•We acquired two new growth businesses in Australia and Turkey.
•Our volume grew 7.1% in developing markets.
•More than 20 million people around the world visited our websites each month for
food ideas and information.
•In an independent survey of leading U.S. retailers, our customers selected Kraft as
“Best of the Best” among all consumer products companies.
•The integration of Nabisco created new growth opportunities and strong synergy
savings.
•We met our productivity target of at least 3.5% of cost of goods sold.
•We generated $2.5 billion in discretionary cash flow (operating cash flow minus
capital expenditures).
•We increased our dividend in the third quarter by 15% to 15 cents, bringing the annual
rate to 60 cents per share.
•And in a very challenging year for equities, we delivered to our investors a total return
of 16.1%.
Despite challenges in some key categories and geographies, our strong results
extended across the company.
All six of our business segments increased volume, and five of the six grew operating
companies income for the year. We saw a negative impact on income in our Latin
America and Asia Pacific segment due to the economic issues we faced in several
Latin American markets.
Kraft Foods North America
Beverages, Desserts and Cereals—Volume was up a strong 8.4%, once again led by
growth in ready-to-drink beverages, including Capri Sun and Kool-Aid Jammers.
Both Maxwell House coffee and Jell-O desserts gained volume as well. Operating
companies income for the segment increased 3.1%.
Biscuits, Snacks and Confectionery—Volume increased 0.7% on strong growth in
cookies and crackers from new products, including Double Delight Oreo, Chips Ahoy!
Cremewiches and Ritz Bits. Snacks volume also was up; however, confectionery
volume was off versus the prior year. Operating companies income was up 12.4%.
Cheese, Meals and Enhancers—Volume grew 0.5%, as gains in Kraft salad dressings,
barbecue sauce and macaroni & cheese dinners, and It’s Pasta Anytime more than
offset lower cheese volume. Operating companies income increased 3.3%.
Oscar Mayer and Pizza—Volume increased 2.3% on growth in Oscar Mayer hot dogs
and bacon, DiGiorno Stuffed Crust pizza and Boca meat alternatives. Operating
companies income was up 8.1%.
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our mission
to be the undisputed global
food leader
consumers... first choice
customers... indispensable partner
alliances... most desired partner
employees... employer of choice
communities... responsible citizen
investors... top-tier performer
fellow shareholders:
Note: All operating results discussed in this letter are on a pro forma basis.