Kraft Heinz lifts annual profit target again on margin boost from higher prices
Reuters
Published Nov 01, 2023 07:08AM ET
Updated Nov 01, 2023 10:26AM ET
(Reuters) -Kraft Heinz on Wednesday raised its 2023 profit estimates for the second time this year after topping quarterly earnings estimates on higher prices for its packaged meals and condiments, sending its shares 5% higher in early trading.
Prices rose 7.1 percentage points in the third quarter as Kraft Heinz (NASDAQ:KHC) like other packaged food makers benefited from price hikes undertaken during the past two years to counter steep supply chain and commodity costs.
Higher prices of Lunchables and Mac and Cheese Cups and easing supply-chain snags and powered a 396 basis points expansion in adjusted gross margin to 34% in the quarter, Kraft Heinz said.
However, there were signs that the prices hikes were starting to take a toll on demand from inflation-weary customers as overall volumes slipped 5.4 percentage points.
"We expect subdued stock reaction due to concerns about continued volume deceleration into 2024 from raising prices too high," TD Cowen analyst Robert Moskow said.
Kraft Heinz's sales growth in North America was pressured by its meats category as higher prices led customers to cut back on meat purchases.
The Jell-O maker also flagged demand softness in Asia markets but expects a return to normal levels of growth in the fourth quarter.
Kraft Heinz forecast full-year adjusted profit in the range of $2.91 to $2.99 per share, compared with $2.83 to $2.91 earlier.
The Philadelphia Cream Cheese maker logged adjusted earnings of 72 cents per share for the quarter ended Sept. 30, above analysts' estimates of 63 cents, according to LSEG data.
But quarterly net sales of $6.57 billion missed expectations of $6.72 billion.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.