Following a year or more of speculation, Altria Group Inc., the New York-based holding company that owns both Kraft Foods Inc. and cigarette-maker Philip Morris, said it would spin off its 89 percent stake in Kraft to its shareholders on March 30.
Ironically, the announcement came in a fourth quarter financial report, in which Altrias profits were boosted by cigarette earnings but dragged down by lower earnings at Kraft.
As expected, Irene Rosenfeld, CEO just since last June, will replace Louis Camilleri as chairman of Kraft, based in Northfield, Ill. Camilleri stays chairman/CEO of Altria, although he will continue to serve on the Kraft board.
Altrias fourth quarter profit was $2.96 billion, up from $2.29 billion a year earlier, and higher than analysts estimates. Revenue, excluding excise taxes collected, was $17.99 billion. Krafts profit declined 19 percent to $624 million, or 38 cents a share, for the last quarter. Sales fell 3 percent to $9.37 billion, partly because of divestitures and having one less shipping week compared with the year-earlier period. The company reported 2006 net earnings of $3.06 billion, up 16 percent, on a sales increase of 0.7 percent to $34.4 billion.
Meanwhile, operating income at Philip Morris USA rose 4.2 percent to $1.1 billion, as higher prices offset a 0.4 percent decline in cigarettes shipped. And operating income at Philip Morris International rose 46.5 percent to $2.2 billion, as the number of cigarettes shipped rose 3.9 percent.
In other statements, Kraft said it will spend $300-400 million this year on developing and marketing new products to spur revenue growth by at least 3 percent.
- 1903 - James Kraft begins a cheese business in Chicago.
- 1985 - General Foods Corp. acquired by Philip Morris Cos.
- 1988 - Philip Morris buys Kraft for $12.9 billion, the largest non-oil acquisition in U.S. history.
- 1995 - Kraft General Foods is renamed Kraft Foods Inc.
- 2000 - Philip Morris buys Nabisco Holdings for $14.9 billion, assigns it to Kraft.