Dallas, Texas 12/19/2014 (FINANCIALSTRENDS) – Investors cheered the new CEO appointment, rallying Kraft Foods Group Inc (NASDAQ:KRFT) to all-time high of $63.38. More than 8.66 million shares changed hands on Thursday, compared to its average volume of 2.54 million shares. The stock has delivered roughly 20.5% returns over the trailing twelve months.
Kraft Foods announced that its Chairman John Cahill will succeed Tony Vernon as new CEO. Vernon is retiring later this month. The appointment will put Cahill in the leadership position of the company battling for its share amid sluggish demand for packaged food products in the U.S.
The company announced that Vernon would continue to serve as an adviser until March 31, 2015 and will also continue on its Board of Directors until the next annual meeting. Cahill joined the company in 2012 and is serving as executive chairman since the spinoff.
The Expectations
Kraft Foods Group Inc (NASDAQ:KRFT)’s new CEO would require to accelerate the pace of change to optimize shareholder value. Under Vernon’s leadership, the company expanded itself among the millennial and Hispanics consumers but it didn’t consider high-growth areas like natural and organic foods unlike some peers. The company also stayed away from acquisitions.
Kraft Foods’ current portfolio comprises Maxwell House coffee, Oscar Mayer meat and Jell-O. Kevin Dreyer, a portfolio manager at Gabelli Funds, said that the multiples that meat and coffee businesses have been sold for comparatively higher than Kraft’s overall multiple.
The Road Ahead
Kraft Foods Group Inc (NASDAQ:KRFT) reported 11% drop in 3Q14 profit as price hikes hit demand. At the earnings conference call, Vernon said that the performance was impacted by challenging consumer environment and certain executional ‘missteps.’
Kraft’s lead independent director, Mackey J. McDonald said Cahill brings significant experience in identifying and leveraging opportunities to grow the company’s brand portfolio and lead it to greater heights.
