Kraft profit up on cost cuts, hedging gains

(Reuters) - Kraft Foods Group Inc (KRFT.O) on Thursday reported a higher quarterly profit, helped by cost cuts and gains related to moves to manage the cost of key ingredients in its products such as Velveeta cheese and Maxwell House coffee.

Kraft has raised or will soon increase prices on about 45 percent of the products in its portfolio, including cheese, cold cuts and bacon due to significant spikes in commodities such as dairy and meat, executives said on a conference call with analysts.

Chief Executive Tony Vernon said the company could temporarily lose some market share due to the price hikes, but that its long-term growth model remains intact.

"We feel good about our ability to manage our costs over time," Vernon said.

Kraft previously warned that the slowly improving U.S. job market and the recent reduction in federal food stamp benefits would soften results at the start of 2014.

The Northfield, Illinois-based company said first-quarter net earnings were $513 million (303 million pounds), or 85 cents per share, up from $456 million, or 76 cents per share, a year ago.

The earnings-per-share from the latest quarter included a 2-cent gain related to retiree benefits as well as a 5-cent boost related to Kraft's hedging activities, it said.

Net revenue fell 3.3 percent to $4.4 billion, largely due to customers working through supplies left over from the soft holiday season and the shift of the timing of Easter into the second quarter.

Kraft, whose products also include Oscar Mayer lunch meats, Planters nuts and Capri Sun juices, lost its exposure to high-growth emerging markets after its 2012 split from Mondelez International Inc (MDLZ.O) and has been working to increase sales of its stable of mature brands.

Shares of Kraft, which closed at $56.69, were unchanged in extended trading.

(Reporting by Lisa Baertlein in Los Angeles; Editing by James Dalgleish and Richard Chang)