Kraft Foods ( KFT) said Monday its first-quarter profit fell 32.7%, despite a rise in revenue, due to higher commodity prices and restructuring charges.

In addition, the company announced it expects full-year 2004 earnings at the low end of its original guidance but in line with analysts' average projections.

Kraft's profit fell to $560 million, or 33 cents a share, from $848 million, or 49 cents a share, a year earlier. The company cited a charge of 12 cents a share from exit costs due to its restructuring program.

The company exited five plants and eliminated 2,000 positions worldwide in the quarter, resulting in pretax charges of $279 million. Pretax savings from the restructuring program were $10 million for the quarter. For the full year, the company projected pretax exit costs and all intangible asset charges of $750 million to $800 million and pre-tax savings of $120 million to $140 million for the restructuring program.

Excluding items, Kraft earned 45 cents a share in the quarter, which beat the Wall Street consensus for 43 cents a share.

Sales increased 4.5% to $334 million while volume increased 0.5%. Kraft said volume strength across many of its businesses was partially offset by continued challenges in cookies and cereals -- including the low-carbohydrate diet trend -- trade inventory reductions in certain categories and countries and tough comparisons with last year.

"Costs of many commodities surged during the quarter, most notably U.S. cheese costs, which reached historical highs," the company said in a statement. "These higher costs are expected to be a key challenge for both Kraft and the food industry."

In 2004, the company sees earnings of $1.63 to $1.70 a share, which includes 30 cents a share from asset impairment charges and restructuring-related exit costs. But the company said its guidance is in line with Wall Street's consensus estimate for $1.94 a share.

Kraft anticipates its full-year earnings will be hurt by higher commodity costs, increased marketing and price-gap management spending, higher pension and post-employment costs and restricted stock expense and gains on sales of businesses recorded in 2003.

The company said prices for many of its major commodities, including dairy, soybean oil, grains and coffee, increased substantially during the first quarter. Dairy costs especially are expected to remain significantly higher than last year and remain a key challenge in the remainder of the year because of lower U.S. milk supplies, said Kraft.

Due to the higher commodity costs, the company announced increased prices in several of its U.S. cheese businesses at the end of the first quarter.

Shares of the company closed up 3 cents, or 0.1%, at $31.39.

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