Kraft Heinz has posted another quarterly sales decline in a sign pressure remains on the food group that has suffered from changing shopper tastes.
The US-based company, whose products include Heinz ketchup, HP Sauce and Kraft macaroni and cheese, disclosed a 4.8 per cent dip in net sales from a year ago in the third quarter to $6.1bn. Disposals and the strong dollar caused much of that decline, yet there was also a 1.1 per cent fall on an organic basis.
Kraft Heinz, backed by Warren Buffett and the Brazilian-US investment group 3G Capital, has become emblematic of struggling companies in the consumer goods sector. Products that had been household staples for generations have gone out of fashion.
Miguel Patricio, who became chief executive this year, said the latest results “remain below our potential” but added the company was “making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction”.
“Although there is still much work ahead, we’re encouraged by our improving performance.”
Wall Street analysts had expected the declines and shares in Kraft Heinz, which have sold off heavily this year, rose 4.7 per cent in pre-market trade. The latest results from the Chicago-based company follow a $1.2bn accounting charge in August and a $15bn writedown earlier in the year.
In the third quarter a one-time gain on the sale of the Company’s Canadian natural cheese business helped net income rise from $619m to $899m. Stripping out exceptional items, earnings before interest, taxes, depreciation and amortisation fell 7.8 per cent to $1.5bn as higher input costs also hurt the bottom line.
The earnings come after it emerged last month that 3G, which created the food business in a 2015 merger of Kraft and Heinz, reduced its stake. 3G sold $713m worth of stock, cutting its stake from about 22 per cent to 20 per cent. At the same time, individual 3G partners including Jorge Paulo Lemann bought about $200m of stock.
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