Kraft Heinz falls short on fourth quarter sales targets as US demand dwindles
16-02-2018 14:47
Ketchup maker Kraft Heinz posted declining organic sales in its fourth-quarter report card on Friday, saying demand for its products had weakened across the US.
KH saw net sales inch forward 0.3% year-on-year to $6.88bn, just short of analysts' estimates, but taking away a 0.9% benefit as a result of currency moves, organic sales actually fell 0.6% compared to the previous fourth quarter.
Organic sales shrank 1.1% in the US, Kraft Heinz's main market, with prices higher but amid lower shipments across categories such as nuts, natural cheese and cold cuts, partially offset by growth in its macaroni cheese products.
Elsewhere, organic sales fell 8.6% in Canada, but expanded 0.9% in Europe and by 7% in the rest of the world, thanks to an improved showing in the likes of China and Indonesia.
"There's no question that our financial performance in 2017 did not reflect our progress or potential," Kraft Heinz chief executive Bernardo Hees said.
"We made significant improvements in many of our businesses and were able to accelerate some important business investments at the end of the year. This, together with benefits from the US Tax Cuts and Jobs Act and additional investments in our capabilities, should help further advantage our brands and grow our business in 2018 and beyond," he added.
Net income hit $8bn, or $6.52 per share, up from the $944m posted a year earlier as a result of benefits from the US tax overhaul, but adjusted earnings retreated 1.1% to $0.90 a share, missing analysts' estimates of $0.95.
Kraft Heinz, which was formed in 2015 after a $100bn deal masterminded by Warren Buffett and Brazilian firm 3G Capital, suggested on Thursday that it could be looking towards making some merger and acquisition splashes in the future when Hees told investors that changes in the industry had continued to apply pressure for further consolidation, saying "we will continue to generate opportunities for us to expand our portfolio."
The firm highlighted the fact that it had met its target of reducing costs by $1.7bn by the end of the 2017 calendar year.
As of 1620 GMT, shares had fallen back 4.39% to $69.52 each.
