Kraft Heinz Co on Thursday reported quarterly results that exceeded expectations and took a nearly $3 billion charge to write down the value of several businesses, including its Oscar Mayer deli meat and Maxwell House coffee brands.
Second-quarter sales grew 3.8% to $6.65 billion, beating analyst expectations for $6.54 billion, according to Refinitiv.
With movement outdoors restricted due to lockdowns to curb the spread of the novel coronavirus, people around the world bought significantly more groceries during the period for meals at home.
Food companies have particularly benefited from sales in developed countries, which have strong e-commerce infrastructure and adaptable distribution systems.
Revenue from Kraft Heinz's US business rose 8.5% to $4.9 billion in the quarter ended 27 June, as it ramped up inventory and grew sales across nearly all its retail categories.
The company, which makes Planters peanuts and Philadelphia cream cheese, was also able to raise prices due to less promotional activity.
Kraft Heinz wrote down the value of four reporting units by nearly $1.8 billion, including charges at its US and Canadian foodservice businesses, that supply restaurants, cafeterias and cafes.
"The foodservice impairments reflect the possibility of slightly lower longer-term growth rates in light of COVID-19 impacts, and we've adjusted our long-term growth outlook for Canada Retail given its recent history and FX (foreign exchange)," Kraft Heinz's head of communications, Michael Mullen, said in an email.
'Longer-Term Margin Expectations'
The writedowns to some of its brands were driving by "longer-term margin expectations due to investments and competition," he added.
The company took nearly $1.1 billion off the value of Oscar Mayer, Maxwell House and seven other brands.
Kraft Heinz in February announced charges of $666 million on the value of some businesses including coffee brand Maxwell House.
Due to the most recent impairment charges, the company reported a second-quarter loss attributable to common shareholders of $1.65 billion, or $1.35 per share, compared with a profit of $449 million, or 37 cents a share, a year earlier.
Excluding items, adjusted earnings were 80 cents per share, handily beating analysts' average estimate of 65 cents.
Shares are up 10.7% on the year, outperforming the benchmark S&P 500 stock index's gain of about 0.9% on the year.