Kraft and Investor Relations

Kraft's Annual Report

Kraft's corporate website is a great resource for all investor relations related materials. This can be found in Kraft's investor center tab on the website.

Kraft's annual report appears to be more a marketing piece than anything else. In 2007, Kraft implemented a three-year growth plan with the goal of strengthening the company. The annual report primarily focuses on the growth strategy that Kraft has been implementing to strengthen their brand.

Where can I find Kraft's 10-K?

Kraft posted their 10-K form in their annual report. If you are interested in checking it out, it can be found on page 15 of the annual report. Kraft made it very easy for stockholders to navigate on the corporate website; Kraft posted all stockholder related information in one place on their website.

The goal of Kraft's annual report.

The goal of the company's annual report is to inform stockholders how well the company is doing, as well as what Kraft is doing to improve their brand image. The annual report is an opportunity for Kraft to update stockholders on all of the things that they have been doing throughout the fiscal year. The annual report is Kraft's chance to highlight their success, and to minimize the negative aspects by letting stockholders how they will improve things in the upcoming year.

Kraft's letter to shareholders..

In Kraft's letter to shareholders, Kraft's CEO, Irene Rosenfield, starts off by emphasizing how the company has been trying to become a "New Kraft." Here is my favorite tag-line from the piece: "we are turning the brands that customers have lived with for years, into brands they can't live without." I think this illustrates the passion that Kraft has. Even though they are an established company, Kraft realizes that it is their job to continually re-evaluate and revamp their products and services.

Rosenfield starts out her letter to shareholders in a very positive manner. She discusses a few points in Kraft's three-year growth plan in which she believes Kraft has been successful.

Here are some of Kraft's key messages..

• We said we were going to strengthen our senior leadership… and we did.
• We said we were going to invest in our brands.. and we did.
• We said we were going to improve our product quality... and we did.
  
• We said we were going to rebuild our product pipeline... and we did.
• And we said we were going to grow... and we did.
  

The rest of the letter talks about Kraft's progress in terms of revenue, some of the challenges that the company has faced, and four of Kraft's growth-plan's main strategies. The strategies that Rosenfield talks about are the rewiring of the organization for growth, re-framing their categories, exploiting their sales capabilities, and driving down costs without compromising quality.

How will this affect investors?

I believe the content of the letter gives investors hope and faith. Investors should be very excited with all of the upcoming changes that Kraft plans to execute. Rosenfield seems very positive with the objectives that Kraft will achieve in the upcoming year, and it makes investors and readers, like myself, feel confident in the company. Kraft's public relations practitioners are very intelligent in the sense that they admit that the company's results were not where they would have liked them to be. Kraft highlights their success along with their plans for the future, which creates confidence in investors, as opposed to doubt.

What is the tone of the piece?

Coincidentally, I always seem to be one step ahead of my homework questions. The letter is very informative. It informs investors on what kind of year the company had, as well as educates investors about the plans for the upcoming year.

Kraft's company earnings.

Kraft's latest news release about the company's earnings is from August 4, 2009, and talks about the earnings from their second quarter. The news release is not written in a reader-friendly manner. Unless you are familiar with business terms, it is somewhat difficult to understand. It includes a lot of statistics,as well as business jargon.

Here is an example of one of the statistics that you can find in the news release:

• 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.

CEO: Irene Rosenfeld

"The investments we've made over the past three years are driving solid business momentum in a challenging economic environment," said Irene Rosenfeld, Chairman and CEO. "We're on track to deliver strong top and bottom-line results, restore our profit margins to industry averages and consistently deliver against our long-term earnings growth target of 7 to 9 percent."

I think the quote from Rosenfeld is well written. She picked a few key points that she wanted to touch upon, and focuses on the positive aspects of each. I think the quote appears to be credible. Rosenfeld discusses the economy has become a challenge for the company, which is credible because it describes the current state that our economy is in.

C-o-n-f-i-d-e-n-c-e?

I believe that Rosenfeld's quote will create confidence in investors. Rosenfeld talks about some of Kraft's objectives for the next year such as restoring their profit margins and delivering against their long term earnings, which illustrates Kraft's confidence in their strategy.

How was bad news relayed?

Rosenfeld implies that the company has faced some challenges through her choice of key words such as "restore." The idea that Kraft has not been doing great business is subtly inferred, so that investors have the idea that Kraft didn't do as good as they may have hoped, but they don't dwell upon the negativity. Instead, Kraft highlights all of the positive things that hope to achieve in the future.

Changes? Suggestions? Feedback?

If I was in Kraft's position, I would suggest changing one thing. I would have changed the language of the news release. I think it should be more reader-friendly. The company needs to assume that not all of their investors are educated to the best of their ability, so my suggestion would be to write the new release on the level of a sixth grader.

Other than that, I think Rosenfeld's quote is beautifully written, and I can only hope that I could have written something as brilliant if I was in her position. Great job Kraft!