Kraft Heinz Co has raised its forecast for annual organic sales growth after benefiting from higher product prices and sustained demand for its packaged meals and condiments.
Packaged food makers including Kraft Heinz and Campbell Soup Co are still seeing strong demand for their quick-fix meals, sauces and cooking essentials that boomed in popularity during lockdowns.
The Philadelphia Cream Cheese maker forecast 2022 organic revenue growth of mid-single-digit percentage, compared with its prior outlook for a low-single-digit percentage increase.
In a further boost, consumers so far have not shown much resistance to price increases to combat a worldwide surge in costs of labour, raw material and freight. But Kraft Heinz stopped short of raising its core earnings forecast for 2022.
"Although we are seeing higher inflation than we initially expected, pricing and growth efficiencies are already offsetting the vast majority of that inflationary pressures," Kraft Heinz chief financial officer Andre Maciel said in his prepared remarks.
"Expectations for food companies may have been lowered a small amount overnight," J.P. Morgan analyst Ken Goldman wrote in a note.
The company's revenue fell to $6.05 billion (€5.7 billion) in the first quarter ended 26 March, from $6.39 billion (€6.07 billion) a year earlier. Analysts on average had expected $5.83 billion (€5.5 billion), according to IBES data from Refinitiv.
'A Strong Start To The Year'
Commenting on the company's performance, Kraft Heinz CEO Miguel Patricio, said, "Our first quarter was a strong start to the year and yet another period where our team rose to mitigate new and different macro environment challenges.
"We continue to build critical capabilities, greater corporate agility, and additional financial flexibility to address short-term turmoil while building our long-term advantage. We still have work to do, more opportunity ahead, and we remain confident in our ability to deliver our plan for the year as well as our long-term growth strategy."