Kraft Heinz has raised its full-year profit forecast after beating first-quarter expectations, as price hikes and resilient demand helped the Heinz ketchup maker cushion a blow from higher commodity costs.
Shares of the Philadelphia Cream Cheese maker were up 2.6% in premarket trading.
The packaged food maker, like other US peers such as Kellogg, Coca-Cola Co and General Mills, has been increasing product prices steadily to protect profits from rising costs of some raw materials like vegetable oils, wheat and dairy.
But even as inflation squeezes household budgets, consumers have refrained from trading down to cheaper alternatives and are still willing to pay more for their favourite snack brands despite multiple rounds of price hikes.
"We delivered strong results in the first quarter of 2023, with net sales growth across both our North America and International zones that continues to be fueled by foodservice, emerging markets, and US retail GROW platforms," added Kraft Heinz CEO and chair of the board, Miguel Patricio.
First-Quarter Highlights
The company expects adjusted earnings between $2.83 to $2.91 per share for 2023, above the prior target of $2.67 to $2.75 per share. Analysts on an average have forecast $2.72 per share.
The firm's strong outlook echoes comments from peers PepsiCo Inc and Mondelēz, who have lifted their annual forecasts in recent months on the back of price increases.
The company reiterated its target for 2023 organic net sales growth of 4% to 6%, compared to 2022.
Excluding one-off items, Kraft Heinz earned 68 cents per share, topping analysts' estimate of 60 cents per share.
Its net sales rose 7.3% to $6.49 billion in the first quarter, while analysts on average expected $6.4 billion, according to Refinitiv IBES data.
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