Kraft tops forecasts, as Cadbury feeds in a chunk of profit

The US giant, whose brands include Maxwell House coffee and Oreo cookies, said profits had risen 13 per cent to $937 million (590m) in the second quarter.

Net revenues came in at $12.3 billion, with Cadbury accounting for about nine-tenths of the 25 per cent increase.

Kraft acquired the historic Bournville chocolate maker earlier this year, paying almost 12bn after a hostile takeover battle, which sparked union fears of sweeping job cuts.

Cost synergies from the deal are now likely to be at least $750m, up from a predicted $675m. The company did not provide further details in its Q2 results statement, simply saying it was making "excellent progress" on the Cadbury integration. That programme of bringing the businesses together is likely to cost $1.5bn, up from a previous forecast of $1.3bn.

Kraft triggered outrage shortly after the acquisition by announcing that Cadbury's Somerdale factory near Bath would close despite earlier pledges to keep it open. Posts have also been cut at Cadbury's offices in Uxbridge, west London, and Bournville in Birmingham as the group looks to cut out duplication in its newly enlarged operations.

There was a marked difference in the performances of the two businesses in the US during the period under review.

Net revenues from Kraft Foods declined 1.9 per cent in North America, amid weak consumer conditions and aggressive promotional activity by rivals.

Cadbury, the owner of Dairy Milk, Halls and upmarket choc brand Green & Black's, saw revenues growth in the US of 7.5 per cent after successful new product launches for gum brands Trident and Dentyne.

Kraft's revenues increased 34 per cent in Europe, of which 31.8 per cent came from the Cadbury acquisition.

Kraft chief executive Irene Rosenfeld said: "We delivered strong earnings in the quarter and the first half of the year, despite difficult conditions in many markets that tempered top-line growth."

She labelled the second-quarter revenue performance "mixed", citing softness in the US where rivals' promotions on products like cheese, biscuits and salad dressing hurt Kraft's sales. But those discounts have not succeeded in fuelling store traffic or category sales growth, and therefore they could decrease in the second half of the year, Rosenfeld argued.

The group trimmed its full-year revenue growth forecast to a range of 3 per cent to 4 per cent, from a previous view of at least 4 per cent.