Kraft Heinz has posted a steeper-than-expected fall in quarterly revenue as demand stayed weak for its branded meal kits and snacks with consumers trading down to cheaper, private-label alternatives.
Kraft Heinz has struggled to hold on to market share as value-seeking consumers cut back spending on packaged food items such as Lunchables, Capri Sun and Mac & Cheese, following price hikes over the last few years.
It also said 2024 adjusted earnings per share was now expected to be at the low end of its prior range of $3.01 to $3.07.
Quarterly Highlights
The packaged food giant's net sales fell 2.8% to $6.38 billion, compared with analysts' estimates of $6.42 billion, according to data compiled by LSEG.
Gross profit margin for the quarter increased 20 basis points to 34.2%, while operating income decreased 115.5%, driven by non-cash impairment losses of $1.4 billion.
The impairment charge was due to an intangible asset impairment largely on the Lunchables brand and a goodwill impairment related to the Continental Europe reporting unit, the company noted.
'Continued Momentum'
“In the third quarter, our top-line performance across two of our strategic pillars, Global Away From Home and Emerging Markets, grew in line with our expectations,” said Kraft Heinz CEO Carlos Abrams-Rivera.
“As we look forward, we are expecting continued momentum in these two pillars. When we look at our US Retail business, we are expecting more of an elongated recovery, driven by specific categories that continue to experience pressure,” he added.
Outlook
Kraft Heinz expects full-year organic net sales to be at the low end of its previous guidance range of down 2% to flat versus the prior year.
Adjusted operating income growth is forecast at the low end of the previous guidance range of 1% to 3% versus the prior year.
Abrams-Rivera added, “While a recovery is taking longer than originally anticipated, we are not losing sight of our long-term strategy. We remain confident in our ability to drive profitable growth, generate strong cash flow, and return capital to our stockholders.”
News by Reuters, additional reporting by ESM.
