Kraft Heinz missed Wall Street expectations for first-quarter sales as inflation-weary consumers pushed back on higher prices of its branded lunch combos, meat cold cuts and mac and cheese.
The packaged food maker kept its fiscal year 2024 targets unchanged.
In a shift from 2023 when government benefits helped Americans expand their grocery budgets, shoppers this year are hunting for value, prompting Kraft-Heinz and peers to re-jig their products and strategies following years of price hikes.
Overall volumes for the quarter fell 3.2 percentage points, while prices rose 2.7 percentage points across Kraft-Heinz's portfolio.
Volumes decline in its biggest North America segment eased, down 3.7 percentage points from last year's drop of 6.5 percentage points.
Kraft Heinz is leaning on promotions to help aid a recovery in volumes across its markets but still-high inflation has hampered those efforts.
The company still expects volumes to turn positive in the back half of the year.
Quarterly Highlights
The Heinz ketchup maker posted net sales of $6.41 billion (€6.01 billion) in the three months ended 30 March, compared with analysts' average estimate of $6.43 billion (€6.03 billion), according to LSEG data.
Adjusted earnings per share of 69 cents was in line with analysts' estimates.
The company maintained its forecasts for organic net sales growth to be flat to 2% and adjusted earnings to grow in the range of 1% to 3%.
Its adjusted operating income increased 1.7% year on year during the quarter to $1.3 billion (€1.2 billion), primarily driven by higher pricing.
Gross profit margin increased 240 basis points to 35.0%, while adjusted gross profit margin increased 170 basis points to 34.5%.
Kraft Heinz CEO Carlos Abrams-Rivera stated, “Our first quarter results were in line with our expectations, with growth across each of our three strategic pillars – Global Away From Home, Emerging Markets, and North America Retail ACCELERATE Platforms – and continued sequential volume recovery. At the same time, we increased year-over-year operating income in the quarter.”
News by Reuters, additional reporting by ESM.
