Kraft, Sara Lee say turnaround efforts are succeeding

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Published at: www.chicagotribune.com

Commodity Pricing will certainly hamper turnarounds

April 10, 2008

Analysis by: GLG Expert Contributor

In addittion to all press about corn and wheat prices which affect Kraft and SaraLee they are now exposed to sugar as well.    The explosion at Savannah which will keep that refinery off line for at least a year (and maybe forever) destroyed almost 10% of the U.S. refining capacity.  Their are only 8 cane refineries in the U.S, and now only 7 are operable. Recall after Katrina knocked out the New Orleans refinery for 90 days that sugar prices skyrocketed from $25/cwt to over $40.  The New Orleans refinery was much smaller than the Savannah refinery and was only off line for 90 days. Since the sugar industry has been quick to downplay this to hopefully head off the USDA opening up the imports again;  the fact that all this occured during the winter months when demand is normally low and the beet sugar guys are trying to "clear storage" which dumps an inordinate amount of refined sugar into the market during a short period of time.  The shortfall will start showing up in May/June.

The Price of Cheese

March 17, 2008

Analysis by: GLG Expert Contributor

Kraft has the opportunity now to fix the price of cheese to the advantage of the organization. The National Cheese Exchange is to be manipulating prices. If Kraft can negotiate with the National Cheese Exchange the move would allow for Kraft to stabilize their cost and add more to the bottomline if a deal can be reached. Kraft is a household name and have enough business savvy to make head way in their efforts to turnaround sale and profits growth. On the other hand Sarah Lee needs become more competitive in the baking industry by introducing better and high-end product.

Rick SheaPresidentShea Marketing Consulting Inc.

Kraft and Sara Lee turnaround ? Real or wishful thinking ?

March 14, 2008

Kraft and Sara Lee executives recently spoke at analyst conference concerning their recent improvements to drive sales growth and improve operating margins.Both suggested the progress is real and sustainable.   Kraft highlighted new products and headcount reduction as keys to their progress.New products are clearly needed and our key to drive future sales growth.The job cuts they mentioned are real and should help them provide a lower cost basis to expand marketing and potentially improve margins at the same time.  Sara Lee also touted new product innovation and organizational restructuring as means to improve their growth and enhance profitability.Pricing is also key at both companies as they face strong headwinds in the face of commodity inflation.  Do we believe both CEO's assertions and are better days ahead for both companies ?