Kraft Foods Inc.reported strong second quarter 2009 results fueled by solid performance across all geographies. Organic net revenue growth reflected the impact of cost-driven pricing actions taken in 2008, positive volume/mix and the benefits of incremental investments in brand building. Income growth and margin expansion were driven by lower costs due to the completion of the 2004-2008 Restructuring Program, improved product mix and lower fixed manufacturing costs.
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Net revenues declined 5.9 percent to $10.2 billion, including the unfavorable impact of 8.1 percentage points from currency and 0.7 percentage points from divestitures.Organic net revenues grew 2.9 percent, driven by 2.7 percentage points from pricing and 0.2 percentage points from volume/mix. The favorable impact from the shift of Easter-related shipments into the second quarter this year was more than offset.
Operating income increased 7.6 percent from the prior year to $1,531 million. Lower costs due to the completion of the Restructuring Program accounted for 10.0 percentage points of growth, partially offset by a negative 8.2 percentage point impact due to currency translation.
The company delivered this strong increase in operating income despite an unfavorable impact of about 9 percentage points from gains in second quarter 2008. Specifically, second quarter 2008 benefited from approximately $90 million(2) more of gains due to certain commodity hedging activities and a $40 million value added tax credit in Brazil.
Operating income margin increased 190 basis points year-over-year to 15.1 percent. Approximately 130 basis points of the improvement were attributable to lower costs due to the completion of the Restructuring Program, while approximately 50 basis points were attributable to favorable product mix.
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