Kraft Foods Inc said it plans to split into two publicly traded companies, with one focusing on its international snack brands, such as Trident gum and Oreo cookies, and the other on its North American groceries business that includes Maxwell House coffee and Oscar Mayer meats.
The move by the food giant to split its high-growth international business from its domestic grocery brands highlights the increasing focus by US companies on growth in emerging markets.
“Simply put, we have now reached a stage in our development with a global snacks and grocery businesses in North America in which each benefit from standing on their own and focusing on their unique drivers of success,” chairman and chief executive Irene Rosenfeld said during a conference call on Thursday.
Kraft said the deal would allow both companies to focus better on their priorities.
The grocery business will cater to traditional domestic retailers, with products such as Kraft Cheese and Maxwell House coffee, and has estimated revenue of US$16 billion.
The grocery business would still be one of the largest food and beverage companies in North America and the company said it would build on its leading market positions with some of the world’s most well-known grocery foods, such as Kraft Macaroni and Cheese, Oscar Mayer meats and Jell-O desserts.
Kraft’s snack business, twice the size with revenue of US$32 billion, will emphasize international growth — particularly in attractive emerging markets — with products such as Tang, Cadbury chocolate and Trident gum that are typically sold at quick-stop retailers.
The company has built up its snacks business over the years, helped in part by the acquisitions of LU biscuit from Groupe Danone SA and Cadbury PLC. The company said roughly 75 percent of the new snack business revenue comes from international sites and approximately 42 percent from emerging markets, where a growing middle class represents a major growth opportunity.
The deal is expected to take at least a year or more to complete as it works on the structure, management and other issues related to the tax-free spin-off. Taking that into account, the Northfield, Illinois, company’s current plan is for the split to be complete by the end of next year.
Kraft announced its plans to split the company at the same time that it reported that its second-quarter earnings climbed 4 percent to US$976 million, or US$0.55 per share, from US$937 million, or US$0.53 per share, a year ago. Revenue rose 13 percent to US$13.88 billion from US$12.25 billion.
The firm also boosted its full-year forecasts for revenue from existing businesses and operating earnings.
Kraft now anticipates so-called organic revenue to climb at least 5 percent, with operating earnings of at least US$2.25 per share.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the