Kraft Heinz reports lackluster Q1 sales

15 May 2018 --- Kraft Heinz has reported its first-quarter 2018 results which show net sales dropped 0.3 percent to US$6.3bn in the three months to the end of March, while organic net sales fell 1.5 percent overall.

The company behind brands like Heinz ketchup and Jell-O says its Q1 financial results reflect higher input costs, lower net sales in the US and investments to enhance capabilities, as well as lower taxes versus the prior year period.

“Our first-quarter results were consistent with, if not slightly better than, the expectations we expressed in February,” said Kraft Heinz CEO Bernardo Hees. “The initial successes we see in the marketplace, together with the strong investments we’re making in marketing, new product innovation, and capability-building, give us increased confidence in delivering the top- and bottom-line growth we expect in 2018.”

Net sales were US$6.3 billion, which is down 0.3 percent versus the same period a year ago, including a 1.2 percentage point benefit from currency.

Organic net sales decreased 1.5 percent versus a year ago, while pricing increased 1.0 percentage points, driven by price increases in the US and Rest of World markets.

The Volume/mix decreased 2.5 percentage points, primarily driven by lower shipments in the US and Rest of World markets that more than offset solid retail growth in Canada and EMEA, as well as foodservice gains in the US and EMEA.

Net income attributable to common shareholders increased to US$1.0 billion and diluted EPS increased to US$0.81, primarily reflecting benefits from US Tax Reform.

Adjusted EBITDA decreased 2.6 percent versus a year ago to US$1.8 billion, including a favorable 0.9 percentage point impact from currency. Excluding the impact of currency, the decline in Adjusted EBITDA reflected higher input costs, lower volume/mix and investments in strategic initiatives.

Adjusted EPS increased 6.0 percent to US$0.89, mainly reflecting lower taxes versus the prior year period, according to the company.

US net sales were US$4.4 billion, down 3.3 percent versus the year-ago period. Pricing increased 0.8 percentage points as higher pricing was partially offset by the timing of trade spending versus the prior year period.

Volume/mix decreased 4.1 percentage points as solid gains in foodservice and a favorable shift in Easter-related sales was more than offset by lower shipments of nuts, cold cuts, frozen potatoes and parts of the cheese business.

US Segment Adjusted EBITDA decreased 5.6 percent versus the year-ago period to US$1.4 billion, primarily reflecting lower volume/mix, non-key commodity inflation and investments to enhance capabilities that were partially offset by gains from productivity and pricing.