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Zacks Analyst Blog Highlights: Kraft Foods, Cadbury, Citigroup, Deutsche Bank and NCI Building Systems

Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Kraft Foods Inc. (NYSE: KFT), Cadbury Inc (NYSE: CBY), Citigroup (NYSE: C), Deutsche Bank (NYSE: DB) and NCI Building Systems Inc. (NYSE: NCS).

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Here are highlights from Thursday’s Analyst Blog:

Cost Savings at Kraft

Kraft Foods Inc. (NYSE: KFT), a leading manufacturer and marketer of packaged food and grocery products worldwide, has outlined several cost saving strategies to position itself as a strong bidder for the possible takeover of Cadbury Inc (NYSE: CBY).

Kraft Foods and Cadbury combined would create a company with annual revenues of $50 billion (£30 billion), beating Nestle as the world’s leading food group.

Kraft on Monday had proposed a takeover of Cadbury for $16.2 billion (£10.2 billion). However, Cadbury rejected the offer on grounds of it being significantly undervalued.

Management at Kraft is pursuing the takeover, for which it is working on an $8 billion finance program through Citigroup (NYSE: C) and Deutsche Bank (NYSE: DB). In addition to this, the company is focusing on procurement strategies and is in the processes of reducing its supplier base by almost 50%.

NCI Building Tops Expectations

Yesterday, NCI Building Systems Inc. (NYSE: NCS) posted third-quarter profit of 25 cents per share, which came in well above the Zacks Consensus Estimate of 2 cents. The better-than-expected earnings primarily came from the company’s cost-reduction programs implemented since November 2008.

NCI Building not only downsized 43 manufacturing facilities to 32, but also eliminated overlapping and less efficient operations. Moreover, it started utilizing more automation and lean manufacturing tools. These measures reduced cost of goods sold by 17% sequentially and 49.7% on a year-over-year basis. SG&A expenses were down by 9.2% compared to the previous quarter and 31.9% from the year-ago level.

However, quarterly earnings were significantly lower than year-ago net income of $1.63 per share due to lower sales. Quarterly sales of $238.4 million were off by 50% compared to the comparable period in 2008, driven by significantly lower sales volume in all three segments. Engineered Building Systems sales fell 55.5%, while Metal Components and Metal Coil Coatings segments reported sales declines of 44.2% and 51.2%, respectively.

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