How Kraft Heinz Earnings Fell Short

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Kraft Heinz Co. (NASDAQ: KHC) reported its fourth-quarter financial results before the markets opened on Friday. The company posted $0.90 in earnings per share (EPS) and $6.88 billion in revenue. Consensus estimates from Thomson Reuters had called for $0.95 in EPS and revenue of $6.92 billion. The same period of last year reportedly had EPS of $0.91 on $6.86 billion in revenue.

During the quarter, organic net sales decreased 0.6% compared to last year. Pricing increased 1.0 percentage points, driven by price increases in Rest of World markets and the United States.

Volume/mix decreased 1.6 percentage points, primarily due to lower shipments across several categories, particularly nuts, natural cheese and cold cuts in the United States, as well as cheese and coffee in Canada. This was partially offset by ongoing growth in macaroni and cheese in the United States, as well as strong growth from condiments and sauces in Europe, China and Indonesia.

In terms of its segments, the company reported as follows:

  • United States net sales fell 1.1% year over year to $4.79 billion.
  • Canada net sales decreased 4.1% to $591 million.
  • Europe net sales grew 9.3% to $656 million.
  • Rest of World net sales increased 5.2% to $843 million.

The company did not issue any guidance for the coming quarter. However, consensus estimates call for $0.94 in EPS on $6.58 billion in revenue for the first quarter of 2018.

Bernardo Hees, Kraft Heinz CEO, commented:

There’s no question that our financial performance in 2017 did not reflect our progress or potential. 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 U.S. 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.

Shares of Kraft Heinz traded down 5.8% early Friday to $68.48, with a consensus analyst price target of $88.30 and a new 52-week range of $67.65 to $97.77.