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Key Takeaways
- Kraft Heinz sales declined after the food giant raised prices to offset higher costs and as consumers pulled back spending on its products.
- The maker of Jell-O and other food products said it faced industry headwinds caused by consumer pressure.
- Kraft Heinz said it expects consumer pressure to ease in the future, though its full-year organic sales and profit margin outlooks were below 2023 levels.
Kraft Heinz (KHC) shares dropped over 6% in early trading Wednesday after the food giant reported higher prices and falling demand pulled down sales.
The maker of Heinz ketchup and Kraft macaroni and cheese reported fourth quarter revenue declined 7.1% from a year ago to $6.86 billion, missing estimates. Earnings per share came in at 78 cents, slightly higher than expected.
Sales in North America were down 9.1% to $5.17 billion, and international sales fell 0.2% to $1.69 billion. Organic net sales slipped 0.7%, as the company raised prices to offset inflation. Its volume/mix dropped 4.4 percentage points, primarily because of those higher prices and industry headwinds. Kraft Heinz noted it was particularly impacted by cuts in the federal Supplemental Nutrition Assistance Program (SNAP) program, which helps low-income Americans purchase food.
CEO Adam Carlos-Rivera said the industry headwinds were driven by “ongoing consumer pressure.” He added that the company expects “some of these pressures to dissipate, particularly as the reduction in SNAP benefits is lapped.”
Kraft Heinz anticipates full-year organic net sales growth for 2024 to be flat to up 2%, slowing from a 3.4% gain in 2023. It projects adjusted gross profit margin to be up 25 to 75 basis points (bps), well below last year’s jump of 240 bps.
Kraft Heinz shares were down 6.3% at $33.83 per share as of about 11:15 a.m. ET Wednesday, their lowest level since November. They’ve lost more than 15% over the past year.
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