Kraft Foods (KFT) outlined a new growth plan and said it plans to buy back up to $5 billion of its stock.
The packaged-foods giant also gave a 2007 profit projection below Wall Street's expectation, sending shares down about 3% Tuesday.
Kraft's turnaround plan calls for it to "rewire the organization for growth," reframe certain categories to make them more relevant to customers, grow its sales and drive down costs.
In 2007, Kraft expects to invest all of its growth, as well as restructuring savings, back into its plan. The maker of Ritz crackers, Oscar Mayer meats and Planters nuts sees 3% to 4% organic revenue growth for the year.Kraft forecast 2007 earnings of $1.75 to $1.80 a share, excluding 25 cents in restructuring costs. Analysts, on average, predict earnings of $1.92 a share. For 2008, the company expects 3% to 4% organic revenue growth, with operating income exceeding revenue growth. "By 2009, we'll hit our stride," CEO Irene Rosenfeld said in a statement. "We'll fully realize the financial benefits of our investments and deliver our long-term targets of at least 4% organic net revenue growth and 7% to 9% EPS growth." Separately, Kraft said it will buy back $5 billion of its stock following its spinoff from Altria Group (MO - Get Report) next month. Altria currently owns 89% of Kraft, and the holding company plans to distribute the shares March 30. The buyback program will run over the next two years. Shares of Kraft recently were down 94 cents to $34.01.