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Yahoo
13-05-2025
- Business
- Yahoo
KHC Q1 Earnings Call: Lowered Guidance Amid Declining Volumes and Elevated Investment
Packaged foods company Kraft Heinz (NASDAQ:KHC) met Wall Street's revenue expectations in Q1 CY2025, but sales fell by 6.4% year on year to $6 billion. Its non-GAAP profit of $0.62 per share was 3% above analysts' consensus estimates. Is now the time to buy KHC? Find out in our full research report (it's free). Revenue: $6 billion vs analyst estimates of $6.02 billion (6.4% year-on-year decline, in line) Adjusted EPS: $0.62 vs analyst estimates of $0.60 (3% beat) Adjusted EBITDA: $1.43 billion vs analyst estimates of $1.42 billion (23.8% margin, 0.8% beat) Management lowered its full-year Adjusted EPS guidance to $2.59 at the midpoint, a 3.5% decrease Operating Margin: 19.9%, in line with the same quarter last year Free Cash Flow Margin: 8%, similar to the same quarter last year Organic Revenue fell 4.7% year on year (-0.5% in the same quarter last year) Sales Volumes fell 5.6% year on year (-3.2% in the same quarter last year) Market Capitalization: $33.32 billion Kraft Heinz's first quarter results reflected pressure on sales volumes and ongoing challenges in the packaged foods sector, with management pointing to disciplined investments in marketing, research and development, and technology as the company's core response. CEO Carlos Abrams-Rivera explained that Kraft Heinz is 'playing offense with discipline,' emphasizing continued spending on brand renovation and digital tools despite macroeconomic headwinds and declining volumes. Looking ahead, management's revised guidance for the year incorporates both heightened cost pressures—such as commodity inflation and tariffs—and a broader range of potential outcomes stemming from policy changes. CFO Andre Maciel stated that the company is increasing its marketing investment to reach closer to 5% of sales and is allowing for more flexibility in spending to address shifting market dynamics, but expects this will weigh on margins in the near term. Management attributed the quarter's performance to disciplined investment amid a challenging consumer environment, with strategic focus on brand renovation and operational efficiency as key responses to volume and cost headwinds. Elevated marketing and R&D investment: Kraft Heinz is increasing spending on consumer-facing marketing, product innovation, and technology, aiming to improve brand value and operational efficiency. Management highlighted the scaling of its brand growth system, which now targets 40% of its portfolio by year-end, up from 10% the previous year. Brand growth system rollout: The brand growth system—a framework for identifying renovation opportunities in products and packaging—has been credited for recent progress in key brands like Philadelphia cream cheese and in international markets. Management cited its expansion as a differentiator for future competitiveness. Promotional activity and pricing discipline: The company is planning a step up in promotional activity during key seasonal periods such as Memorial Day and back-to-school, but emphasized a disciplined approach to avoid short-term volume boosts that are not sustainable. Price investments remain targeted and are not expected to materially increase beyond levels previously contemplated. Commodity and tariff pressures: Management identified increased input cost inflation, notably in coffee and meat, and the anticipated impact of new tariffs as key factors driving higher cost of goods sold (COGS) for the remainder of the year. Some mitigation is expected through alternative sourcing and productivity initiatives. Emerging market momentum: While developed market volumes remain pressured, management noted ongoing acceleration in emerging markets and specific product categories, such as Mexican foods and cream cheese, which are delivering double-digit growth. Management expects the remainder of the year to be shaped by higher input costs, ongoing investment in marketing and product renovation, and continued softness in core developed markets, while seeking growth in select international categories. Commodity and tariff headwinds: Rising costs in commodities like coffee and meat, as well as uncertainties around tariffs, are expected to pressure gross margins. Management is deploying productivity initiatives and selective pricing but does not foresee major price increases. Marketing and innovation spend: The accelerated rollout of the brand growth system and stepped-up marketing investment are aimed at supporting renovated products and long-term brand health, but will compress margins in the near term. Volume recovery uncertain: While some product categories and emerging markets are growing, management does not expect a broad-based positive inflection in volumes for the year, and is not relying on volume recovery in North America to meet its guidance. Andrew Lazar (Barclays): Asked if the latest guidance cut represents a more comprehensive approach to investment; management responded that increased marketing and brand system expansion distinguish this from past actions. Yasmeen Wandi (Bank of America): Inquired about the drivers of organic sales guidance and whether North American volumes must recover; management stated that positive volume inflection is not required to achieve guidance. Tom Palmer (Citi): Sought clarity on cost inflation breakdown and timing of tariff impact; management indicated most COGS increases will occur in the second half and that mitigation efforts are underway. David Palmer (Evercore ISI): Asked about promotional strategy and pricing discipline; management emphasized targeted promotions aligned with renovated product launches and a focus on long-term profitability. Chris Carey (Wells Fargo): Questioned gross margin pressures and market share; management attributed margin compression primarily to increased promotions, commodity costs, and product renovations, with some brands showing improving share. In upcoming quarters, the StockStory team will be watching (1) the effectiveness of increased marketing and brand renovation efforts in stabilizing or growing sales volumes, (2) the company's ability to mitigate input cost and tariff pressures through productivity and sourcing initiatives, and (3) continued momentum in emerging markets and growth categories like Mexican foods. The timing and impact of new product launches and promotional strategies will be key markers of execution. Kraft Heinz currently trades at a forward P/E ratio of 10.5×. In the wake of earnings, is it a buy or sell? Find out in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Yahoo
11-05-2025
- Business
- Yahoo
Q1 2025 Kraft Heinz Co Earnings Call
Anne-Marie Megela; Global Head-Investor Relations; Kraft Heinz Co. Carlos Abrams-Rivera; Chief Executive Officer, Director; Kraft Heinz Co. Andre Maciel; Global Chief Financial Officer, Executive Vice President; Kraft Heinz Co. Andrew Lazar; Analyst; Barclays Yasmine Deswandhy; Analyst; Bank of America Merrill Lynch Thomas Palmer; Analyst; Citi David Palmer; Analyst; EVERCORE ISI Chris Carey; Analyst; Wells Fargo Securities, LLC Operator Greetings and welcome to the Kraft Heinz Company first-quarter 2025 earnings conference call. (Operator Instructions) As a reminder, this conference being is now my pleasure to introduce Anne-Marie Megela, Head of Global Investor Relations. Anne-Marie Megela Thank you. And hello, everyone. Welcome to the Q&A session for our first-quarter 2025 business update. During today's call, we may make forward-looking statements regarding our expectations for the future, including items related to our business plans and expectations, strategy, efforts and investments, and related timing and expected impacts. These statements are based on how we see things today, and actual results may differ materially due to risks and uncertainties. Please see the cautionary statement and risk factors contained in today's earnings release, which accompanies this call, as well as our most recent 10-K, 10-Q and 8-K filings for more information regarding these risks and we may refer to non-GAAP financial measure which exclude certain items from our financial results reported in accordance with GAAP. Please refer to today's earnings release and the non-GAAP information available on our website at under News and Events, for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures.I will now hand it over to our Chief Executive Officer, Carlos Abrams-Rivera, for opening comments. Carlos, over to you. Carlos Abrams-Rivera Thank you, Anne-Marie. Thank you, everyone, for joining us today. At Kraft Heinz, we are proud to be a trusted partner in kitchens everywhere, providing comfort and connections particularly in these moments of growing market pressure in the first quarter, we delivered top line results in line with our expectations, with strong cash flow performance and a healthy balance sheet. We are also encouraged by the progress we are making in improving brand security. While these advancements in the year reflect through the financial results, they do give me confidence that we're putting in place the right building blocks. Our commitment to making the necessary investments to deliver quality and value offerings to our consumers is unwavering. At the same time, we are closely monitoring market tension and have adjusted our guidance that, I have Andre joining me, so let's open the call for Q&A. Operator (Operator Instructions)Andrew Lazar, Barclays. Andrew Lazar Great. Thanks so much. Carlos, you mentioned in the prepared remarks that the revised outlook provides the necessary flexibility to dial in on investments as deemed appropriate. And that said, this is not the first time, right, Kraft Heinz has sort of used this language around proposed investments. And so far, it's not proved enough, although admittedly in a very dynamic consumer environment. Many industry players I think have taken the approach of kind of like increasing investments on what seems to be more of an incremental basis to see how the consumer reacts, almost like a sort of a test-and-learn approach. The magnitude of today's guidance is larger than previous ones. But I'm still getting all the questions from investors, I guess, as to whether this is more of the same sort of approach or if you see it as more comprehensive in some way. Thanks so much. Carlos Abrams-Rivera Good morning, Andrew. Thanks for your question. First, let me just say, we are continuing to invest in the business despite what we are seeing in terms of the macroeconomic uncertainty. Frankly, because the company decided that we have. And I think in moments like this, company can be sometimes overly cautious on defenses or play offense. We are choosing to play offense with discipline. So we're going to expect prioritizing investments in marketing, R&D, and the way we're doing that, Andrew, we focus on increasing returns of our marketing dollars by shifting more towards a consumer-facing marketing. We're also make sure we're optimizing the allocation across the brands and media types so that, in fact, we make sure we have the best ROI, with an improved quality of the messaging at the same time.I mentioned investing in R&D. We are going to continue to invest behind innovation pipeline. We are making sure we are closing the gap to our investment levels that it is 1% of net sales. And I mentioned technology. We are going to continue to invest in our technology as well because that actually has helped us in terms of driving the efficiencies in the business by investing in things like automation and enhanced digital tools.I think you also talked to why is this different, what's different now versus in the past. And I'll tell you, one of the important parts of what is different is the fact that we're also investing through the brand growth system. And if you recall, the brand growth system is our repeatable global model for understanding how we see opportunities within our brands and how do we make sure we drive superiority on those brands through both type products and packaging and making sure that every communication has the right brand resonance value equations and on the it's not just what we are spending or how we are spending. And we mentioned in the past that we have done this in about 10%, one of our brands in 2024 (inaudible) to pilot. That is, in fact, now being scaled up to 40% of our business by the end of this that idea of us having more confidence in investing because now we have proven that brand growth system help us find the right opportunities and allows us to make sure we take the right steps in order to fuel the investments I think is part of why we are going to be playing offense with discipline. So you'll see us actually the step up our investments in marketing and also to make sure that as we renovate our products, we are supporting it with the right focus on the consumer we invested behind the BGS. We make sure we have the great products, packaging quality. And then we make sure we have the right communications to support it and drive that forward. It's something that helped us work with our Philadelphia brand in 2024. It helped us in our Heinz UK business in the last year. And now, we are going to be seeing that across all of our brands towards 2025 here in the U.S. Andre Maciel Good morning, Andrew. Just to add to Carlos, remember that in our prior guidance, we already had contemplated a step-up in price investments and just roughly speaking to the extent of 100 bps on the top line. So it was a relevant investment and concentrated on those categories we have previously we also had in the prior guidance already contemplated a double-digit increase in media. So we were still retaining our marketing percentage on revenue of 4.5% in the prior guidance. And with that, by reallocating expenses within the marketing bucket, we could free up double-digit increase in in this new guidance, we have opened the room to further accelerate our marketing investments. Remember that in our long-term algorithm, we want to be -- approximately, that's 5%. We had at the midpoint of guidance around 4.8% of market, so a 30 bps step-up. Still, this December, we might flip it a little bit up or down depending how the dynamics happen throughout the year including final impact on tariffs. But we want to accelerate the step-up to reach the 5%.And we also had in the guidance some impact in COGS linkage to product renovation. As Carlos said, as we continue to deploy the brand growth system, we are seeing opportunities not only to improve quality of messaging and media pressure, but also to renovate the products and ensure stronger superiority. Andrew Lazar Great. Thank you, both. Operator Yasmine Deswandhy, Bank of America. Yasmine Deswandhy Good morning, everyone, and thank you for the question. So I kind of wanted to dig in a little bit on North America and the organic sales guidance update for this year. So just for 2Q specifically, there's a few items here to consider. You talked about the Easter timing shift and then there's a plant closure (inaudible). But there are also impacts last year on multiples from the consumer part. And then you had the Capri Sun reformulation impacting consumption. So can you help size the impact, if any, to the second quarter? And if there's anything else that we should consider that will drive a gap between North America shipments versus consumption? Carlos Abrams-Rivera Sure. Good morning. Thanks for the question. Look, we expect second quarter top line to be better than the first quarter top line. The effect of Easter, as I have said before, is approximately 90 bps, 100 bps. So that will be a tailwind in the second addition to that, we had emerging markets (inaudible) we have emerging markets further accelerating from where we were in Q1. And aside from Easter, we're going to see improvement in the (inaudible) platforms. So cream cheese and Ore-Ida, for example, they declined in Q1, and this was totally expected because we are lapping competitors with out-of-stock issues last year. But now, we restored growth. And you're going to see growth in those two categories in the your point, we will see some improvement in Lunchables, still not the levels that we believe we can achieve, as the newer innovations hits the market in the second quarter. But we'll see Lunchables improving, particularly, after mid-May and June because that's when we really start to have fully lapped the consumer reports from last the Muscatine, on the factory, we are lapping that as we head into the second quarter. But taking to mind that the industry (inaudible) has gone down quite a lot this year. So we are not going to see certainly a growth in away-from-home in the second quarter. But beyond that, you will see they accelerate platforms, sauces, cream cheese, meals, and snacking with a better performance in comparison to Q1. Yasmine Deswandhy Okay. Great. Thank you. That's really helpful. And a quick follow-up to that. Just looking into the second half of the year, obviously, understanding that 2Q you'll see some nice improvement on volumes given the one-time items that you just mentioned. Your organic sales cut was basically all volumes and the pricing contribution was left unchanged. Do you see a need for North America volume to inflect positively in the second half in order to hit your guide? Or do you expect growth in international, particularly in emerging markets, to be enough to hit your guidance for the year? Carlos Abrams-Rivera No, we don't. In fact, in the midpoint of our guidance, the total company does not get to positive in any quarters. Yasmine Deswandhy Okay. Great. Carlos Abrams-Rivera (inaudible) Okay? Yasmine Deswandhy Thank you, guys. Operator Tom Palmer, Citi. Thomas Palmer Morning and thanks for the question. I wanted to ask on the COGS inflation on the revised outlook. Just any breakdown of how much of that is related to tariffs versus maybe other drivers of that increase? And then just the timing of when we really start to see that step-up? Thank you. Carlos Abrams-Rivera So in our outlook, we had inflation at 3%. So before any tariffs, our guidance has step-up to 5% of COGS, particularly in some commodities like coffee and meats, we saw a big increase in comparison to the rest of the last time we met. So the base inflation was already up to 5%. And now with the tariff impact, I mean, obviously, a lot of uncertainty still on that. But we do estimate we thought we know so far an impact in 2025 of 150 to 200 bps on the COGS. Timing-wise, look, we don't know for sure. But we are assuming that it's a bit concentrated in the second half. Maybe there'll be some impact in the second quarter. We built some inventory where possible in certain items as we anticipate that to happen. So that gives a little relief of amounts needed to in some of the items. But the impact should be mostly concentrated in the second half. Thomas Palmer Perfect. Thank you for that. And I noticed that there wasn't a change in kind of that pricing outlook, as Yasmine just noted. But it sounds like there's price investment in some areas and then there is incremental pricing in other areas? Maybe just any detail you can provide there? Carlos Abrams-Rivera In the mid-point of the new guidance, we don't have further investments in price in addition to the approximately 100 bps we already had contemplated in the initial outlook. So the incremental investments, as I said, is mostly on marketing, particularly, media, on product renovation. And there is some sampling investments because remember that as we renovated products, including the ones that we have renovated last year like Capri Sun, we really need to step up the trial curve. So we are stepping up sampling investments ahead into the summer. Thomas Palmer Perfect. Thank you for the details. Operator David Palmer, Evercore ISI. David Palmer Thanks. A couple of questions. You updated your inflation guidance, and thanks for your commentary around the tariffs being incorporating in that. I'm wondering how you're thinking about pricing offsets to that. And when it gets to a certain level of input inflation and your willingness to price that away, are there levels where you have to be cognizant of rising price elasticity, perhaps, over a few percent, for example, where you're more aware of any sort of list pricing and you have to start moving towards other types of adjustments or offsets?And then separately, Andre, I know you've been very active in thinking about promotional activity and returns on that promotional activity. When we look at our data, it looks like Kraft Heinz has been a little bit different than some of the other larger food companies and that it's well below 2019 levels in terms of its volume on promotion where some many, many years now, most other companies look like they're at those levels already and continuing to rise. I'm wondering if you kind of recognize that juxtaposition. And how you think about the promotion strategy going forward, is that something that you're noticing as well? Thank you. Carlos Abrams-Rivera Let me start with the second part. It's Carlos. And then have Andre comment a little bit on the first part of your questions. First of all, what you are seeing is the fact that it follows our strategy. I mentioned earlier that we're going to continue to make investments and play offense with discipline. I think for us, it's the opportunity to make sure that what we are investing, we are doing with this in a way that is thoughtful about the return on investment and that we are building something that support our strategy and allows us to grow, not only in the short term, but really in the medium to long why we're investing in pricing for our promotional events is because we believe that actually creates the kind of base volume opportunities as we go post that particular event. So you'll see us continue to invest in times of the year the consumer needs as, whether that is now Memorial Day, whether it's July 4th, whether it's back-to-school. We're just going to do it in a disciplined way to make sure that, again, it's supporting the strategy that we have and not just chase a short-term volume that actually doesn't essentially all you do is kind of rent volume for a short period of other piece that is important to note is that when we're making those investments, we're also doing it in concert with our brand growth systems investments so that when we are going for a back-to-school time period and we have now a renovated new Lunchables, we have a renovated new Capri Sun, that's a moment for us to know we stimulate the demand, but also making sure that the consumers get to try the best product that we have ever made on those I think it's that combination that is kind of guiding our principles versus kind of how competitors are playing at this particular time. There are some different strategy. We want to make sure that we're doing things smartly because our focus is continuing to drive profitable growth for the future. Andre, do you want to comment on the first part? Andre Maciel Yes. Hi Dave. On the promo side, Carlos said, we'll continue to be disciplined and really seeking those promotions with good returns. You will see a step-up in promotional activity during the key windows, particularly now in summer. So you'll see that number stepping up as part of our initial guidance. Again, we have approximately 100 bps of incremental price investments in the regards to pricing, the tariffs, look, we are trying to do everything we possibly can to minimize the amount of price necessary. So even things like the delay, we have anticipated some purchases, we are looking at alternative sourcing. There is opportunity for, in some cases, reformulation, which takes a little bit longer. There are opportunities on the mix side. There are certain SKUs within (inaudible) less impacted than others when it comes with tariffs. So all of that is at play. We are stepping up productivity in the year. We started the year expecting 3.5% of COGS. Now, we are expecting a little more than that. So we are taking all the possible levers. But pricing might be necessary. But again, I think there is work in progress. Operator Chris Carey, Wells Fargo. Chris Carey Hi everyone. I wanted to ask a question about gross margin, then just a follow-up elsewhere. From a gross margin perspective, specifically the Q2 weakness that you're expecting and in the context of just how this typically works, is the primary driver of Q2 gross margin weakness coffee inflation? And I guess I asked that question in the context of, historically, this is really a pass-through category where pricing comes through to offset the inflation, understanding there's always going to be quarter-to-quarter volatility. But are you seeing perhaps less ability to pass through the coffee inflation just given your overall coffee inflation backdrop?And then just secondly, are there any areas within your portfolio or broader portfolio where you're seeing more bright spots from a marketshare perspective? Because I think similar to last quarter, where we continue to struggle is the categories of clearly softened, but market share performance has come under more pressure. And so what are those things that you've been doing over the past few months, maybe specifically, where you're saying, okay, that specific strategy is working to kind of right (inaudible) here? Because it's been a bit harder to see here in the data. So thanks for those two items. Carlos Abrams-Rivera Sure. Thanks for the question. I will start with the Q2 margins. So basically, we do expect the pressure on the gross margin in the second quarter. And there are a few different items affecting the margin. The first one is, as I just had in the prior question, we do expect a step-up in the promotional activity as we start the shipment for the summer season. So we will see a lower price in the P& second, we are facing impact of some hedge losses in the second quarter. They are quite large. And the good thing is that once they roll off heading into Q3, we'll start to see some of those commodities that's starting to come down, like dairy, start to flow through the P& third, to your point, there are some increases in certain commodities in Q2. And the way we see right now, some of them are going to reach the peak in Q2 and that (inaudible) start to go backwards or decelerate, at least, as we head into the third those three elements are the key contributors for the gross margin pressure that we are seeing. There is a little bit as well of the product renovations that we are starting to step-up. So as a result of that, plus we're starting to step-up investment in marketing, we do expect that operating income should decline double-digits in the second regards to the bright spots, I'll hand over to Andre. Andre Maciel I think if you look at our year-to-date -- latest five weeks versus the year-to-date, you'll see us making progress in all of our accelerate businesses, whether (inaudible) renovation, whether it is ready-to-eat meals, whether it's snacking. So all those things are progressing. I think in Q1, obviously, we had the impact of Easter. So I think as we are seeing other data with several weeks of the (inaudible), you are going to continue to see that I think, for example, in a business like our Philadelphia Cream Cheese, which as we now kind of passed the Q1 lapping of the private label not have been on the business in the category last year, you'll see that continue to drive growth, whether you see that in our desserts business that continue to drive growth after reformulations and focusing on better-for-you products in that you will see that many of the investments we're making will continue to play off as we go through the year. And I mentioned that in the opening statement which is a lot of the great things that we are seeing in terms of the building blocks are not yet all reflected in the data. But those are things that you'll see us as we continue to progress throughout the year.I'm also, frankly, very encouraged by the fact that some of the big innovations we have done have continued to now drive growth. So a business like our (inaudible) strategy that we didn't have two years ago, we grew double digits last year, and we are growing double-digits again this year. So that also give me confidence in the fact that as we are building innovation, we're doing it with the right insight with consumers to drive growth that is sustainable and profitable for the long term. Thanks for your question. Anne-Marie Megela Operator, we have time for one more question. Operator [Megan Clapp], Morgan Stanley. Good morning. This is [Alexia], on for Megan. In the prepared remarks, you guys mentioned the wider operating income guide partly reflects a change in policy landscape. Should we be thinking about that from a top line perspective or is that related to costs? Just any incremental color you could give there would be great. Thanks. Carlos Abrams-Rivera Thanks for the question. Look, there are, as you know, a lot of things being discussed and under consideration that might have implication on the business, positive or negative. So part of the reason why we have this wider range is to contemplate a whole different set of scenarios that can come into play. Andre Maciel So we're trying to just provide the flexibility, knowing that there is a number of things that are still volatile. But in that guidance, you'll see that we are acknowledging some of those things, we are preparing for those things, and also at the same time, making sure that we have the right flexibility to invest back into business in order to drive the strategy that we have and then fuel the opportunities that we are seeing with our brand growth system to (inaudible) back in our brands. So that's all reflected in the way we're kind of shaping the year ahead. Carlos Abrams-Rivera Thank you, Alexia. Anne-Marie Megela Thank you, everyone, for joining us. Operator, that concludes our Q&A session. Operator Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
Yahoo
29-04-2025
- Business
- Yahoo
Kraft Heinz lowers sales outlook for the year, weighed down by consumer uncertainty and tariffs
Kraft Heinz lowered its full-year sales and earnings guidance Tuesday, citing weaker customer spending in the U.S. and the impact of President Donald Trump's tariffs. It's the latest big food company to sound the alarm over trade tensions and weak consumer demand. Last week, PepsiCo lowered its full-year earnings forecast, also citing tariffs. And earlier Tuesday, Coca-Cola noted a pullback in U.S. consumer spending due to economic uncertainty. Kraft Heinz acknowledged that it's in a tough spot. It needs to keep prices low to prevent consumers from migrating to cheaper store brands of products like ketchup, mayonnaise and macaroni and cheese. But tariffs – which impact imported ingredients like coffee – will add to its expenses. 'In regards to pricing for the tariffs, we are trying to do everything we possibly can to minimize the amount of price necessary,' Kraft Heinz Chief Financial Officer Andre Maciel said Tuesday during a conference call with investors. Maciel said the company is looking at many alternatives, including shifting suppliers and, over the longer term, reformulating products. Kraft Heinz also said it built up some inventory earlier this year to help cushion the impact from tariffs. Kraft Heinz, which is based in Pittsburgh and Chicago, said its North American revenue fell 7% to $4.5 billion in the January-March period. Weakness in the U.S. overcame some stronger results in Canada. Kraft Heinz said it expects its operating income to fall up to 10% this year. It had previously expected a decline of up to 5%. The company said it needs flexibility to offer promotions and step up marketing. It also wants to add value options, like a new 11-ounce Kraft Mac & Cheese that's designed to feed a family, about 50% more than the original 7.25-ounce box. The company said it also may need to respond to changes in federal regulations. Last week, U.S. health officials urged food makers to phase out petroleum-based artificial colors in the nation's food supply. Kraft Heinz CEO Carlos Abrams-Rivera said Kraft Mac & Cheese has been free of artificial flavors and colors since 2016. But some of the company's products, like Kool-Aid, do contain artificial colors. Kraft Heinz said its net revenue fell 6% to $5.9 billion in the January-March period. That was shy of the $6.0 billion Wall Street was expecting, according to analysts polled by FactSet. The company now expects its adjusted revenue to fall 3.5% this year; it previously expected a 1.5% decline. Kraft Heinz shares were flat in afternoon trading Tuesday. Sign in to access your portfolio
Associated Press
29-04-2025
- Business
- Associated Press
Kraft Heinz lowers sales outlook for the year, weighed down by consumer uncertainty and tariffs
Kraft Heinz lowered its full-year sales and earnings guidance Tuesday, citing weaker customer spending in the U.S. and the impact of President Donald Trump's tariffs. It's the latest big food company to sound the alarm over trade tensions and weak consumer demand. Last week, PepsiCo lowered its full-year earnings forecast, also citing tariffs. And earlier Tuesday, Coca-Cola noted a pullback in U.S. consumer spending due to economic uncertainty. Kraft Heinz acknowledged that it's in a tough spot. It needs to keep prices low to prevent consumers from migrating to cheaper store brands of products like ketchup, mayonnaise and macaroni and cheese. But tariffs – which impact imported ingredients like coffee – will add to its expenses. 'In regards to pricing for the tariffs, we are trying to do everything we possibly can to minimize the amount of price necessary,' Kraft Heinz Chief Financial Officer Andre Maciel said Tuesday during a conference call with investors. Maciel said the company is looking at many alternatives, including shifting suppliers and, over the longer term, reformulating products. Kraft Heinz also said it built up some inventory earlier this year to help cushion the impact from tariffs. Kraft Heinz, which is based in Pittsburgh and Chicago, said its North American revenue fell 7% to $4.5 billion in the January-March period. Weakness in the U.S. overcame some stronger results in Canada. Kraft Heinz said it expects its operating income to fall up to 10% this year. It had previously expected a decline of up to 5%. The company said it needs flexibility to offer promotions and step up marketing. It also wants to add value options, like a new 11-ounce Kraft Mac & Cheese that's designed to feed a family, about 50% more than the original 7.25-ounce box. The company said it also may need to respond to changes in federal regulations. Last week, U.S. health officials urged food makers to phase out petroleum-based artificial colors in the nation's food supply. Kraft Heinz CEO Carlos Abrams-Rivera said Kraft Mac & Cheese has been free of artificial flavors and colors since 2016. But some of the company's products, like Kool-Aid, do contain artificial colors. Kraft Heinz said its net revenue fell 6% to $5.9 billion in the January-March period. That was shy of the $6.0 billion Wall Street was expecting, according to analysts polled by FactSet. The company now expects its adjusted revenue to fall 3.5% this year; it previously expected a 1.5% decline. Kraft Heinz shares were flat in afternoon trading Tuesday.
