Kraft Heinz misses quarter sales views as US demand weakens
NEW YORK — Kraft Heinz Co. marginally missed Wall Street sales estimates in the third quarter and warned it would be hampered in the fourth by many US consumers working through emergency hurricane stores of its tinned goods.
Excluding items, net profit at North America’s third-largest food and beverage company, came in at 83 cents per share, marginally better than a consensus of 82 cents, according to Thomson Reuters I/B/E/S.
The 0.3% dip in US revenue, however, compared to rises for other packaged food companies and came at a time when the firm is struggling with the shift by consumers and retailers away from its processed food toward fresh produce.
Shares of the company, which is backed by billionaire investor Warren Buffett and private equity firm 3G Capital, fell 1.5% in after-market trading.
The company said organic US sales growth would take another 30-basispoint hit from the loading of pantries in southern states in the third quarter in advance of hurricanes Irma, Harvey and Maria.
It blamed the dip in the third quarter — the sixth straight quarterly fall in sales — in part on problems with shipments of cold cuts that would also affect sales in the fourth quarter.
Other packaged food companies have experienced a revival in North American sales this quarter with Mondelez reporting a 1.3% rise in revenue while Hershey posted a 1.6% rise.
Like other processed packaged food makers, Kraft Heinz has been grappling with an increasing number of Americans preferring healthier, non-processed foods, rather than preservative-heavy packaged foods.
To compound their woes, the major customers of traditional packaged food manufacturers, such as grocer Kroger, are shifting shelf space to highermargin private-label brands.
The company said it would make efforts in partnering with retailers to attract consumers from nontraditional channels including e-commerce.
Kraft, which at the start of this year targeted a $1.7-billion cut in costs by the end of 2017, said selling, general and administrative expenses fell about 19% to $653 million in the reported quarter. —