(RTTNews) - Kraft Foods Inc. (KFT), the world's second largest food company, said Tuesday after the markets closed that its third quarter profit fell 39.5% from last year, when results were boosted by huge gains from divestiture of discontinued operations. At the same time, the company raised its full year earnings outlook and said it is still interested in British confectioner Cadbury Plc (CBY, CBRY.L).

The Northfield, Illinois-based company reported net income for the third quarter of $824 million or $0.55 per share, compared to $1.4 billion or $0.91 per share for the year-ago quarter.

Earnings per share from continuing operations for the third quarter were $0.55, compared to $0.34 in the prior year quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.48 per share for the third quarter. Analysts' estimates typically exclude special items.

Gross profit for the quarter increased 7.1% year-over-year to $3.54 billion. Gross margin for the quarter improved to 36.1% from 31.8% a year earlier.

Operating income for the quarter increased 38.7% year-over-year to $1.42 billion. Operating margin for the third quarter improved to $14.5% from 9.8% in the third quarter of last year.

Net revenue for the third quarter fell 5.7% to $9.80 million from $10.40 million in the same quarter last year, hurt mainly by the impact of a stronger U.S. dollar. Eleven analysts had a consensus revenue estimate of $10.32 billion for the third quarter.

Organic net revenue for the quarter grew 0.5% from last year, driven by 0.7 percentage points from volume/mix, partially offset by negative 0.2 percentage points from pricing.

"We continue to build our operating and financial momentum despite the difficult consumer environment," said Irene Rosenfeld, Chairman and CEO. "Our volume/mix, profit margin and cash flow trends are strengthening as we successfully execute our growth plan."

U.S. beverages revenue for the third quarter, grew to $754 million from $743 million a year ago, driven by solid growth in Capri Sun ready-to-drink beverages, Kool-Aid and Country Time powdered beverages as well as Starbucks and Maxwell House coffees.

U.S. cheese revenue fell to $824 million from $919 million a year earlier, while U.S. convenient meals revenue increased to $1.14 billion from $1.08 billion last year.

U.S grocery revenue for the quarter declined to $778 million from $802 million a year ago, while U.S. snacks revenue fell to $1.23 billion from $1.27 billion last year. Canada and North America food service revenue for the quarter slipped to $1.06 billion from $1.11 billion in the prior year quarter.

Europe revenue for the quarter fell to $2.07 billion from $2.34 billion a year ago, while developing market revenue declined to $1.96 billion from $2.14 billion last year.

For the first nine months of 2009, the company reported net income of $2.3 billion or $1.56 per share, compared to $2.7 billion or $1.77 per share for the same period last year.

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