Kraft earns $826 million, but not likely to overbid for Cadbury

Kraft Foods reported quarterly profits of $826 million beating analysts’ expectations, but prompting the company to cut its forecast for full-year revenue growth, according to The New York Times. The company said it remained interested in acquiring Cadbury, the British candy and gum company that rejected a $16.7 billion takeover bid made over the summer. Net earnings in the third quarter fell to $826 million from $1.37 billion a year earlier, when it had a big gain from the sale of Post Cereals. Sales were $9.8 billion for the quarter, down from $10.4 billion in the third quarter a year ago. The company also cut its forecast for organic net revenue growth, a measure that excludes currency fluctuations and other one-time items, to 2 percent from 3 percent, partly as a result of weakening economic conditions in Europe and the pruning of some unprofitable product lines. Kraft reported almost $3 billion of cash on hand at the end of the quarter, more than four times the level it held a year ago, an increase that may be partly attributable to its possible plans for Cadbury. Kraft faces a tougher task winning over Cadbury shareholders in its bid battle after the cut in analyst estimates of what it could afford to pay for Cadbury. Kraft''s results reinforce the view it will turn the bid hostile, before using a $9 billion bridge loan to sweeten the cash element of its offer.