Latest news with #CarlosAbrams-Rivera
Yahoo
22-05-2025
- Business
- Yahoo
Disposals – and M&A – on cards as Kraft Heinz looks to craft new future
Given Kraft Heinz's ongoing difficulties in growing its top line, the news the US food and drinks major is weighing its options isn't the biggest surprise. But what comes next for the Heinz ketchup and Jell-O desserts owner remains the subject of some speculation among Wall Street analysts. On Tuesday, Kraft Heinz put out a brief statement, revealing the company is considering 'strategic transactions to unlock shareholder value'. The deliberations have apparently been going on for months. 'At Kraft Heinz, our goal has always been to make high-quality, great-tasting food for all and to keep consumers at the forefront of all we do, enabling us to drive profitable long-term growth and value creation,' Kraft Heinz CEO Carlos Abrams-Rivera said. 'Consistent with this goal, over the past several months we have been evaluating potential strategic transactions to unlock shareholder value. As we look to the future, we will continue to inspire and delight consumers with our iconic brands, fulfilling our mission.' Abrams-Rivera is into his second year as Kraft Heinz CEO, having moved into the top job at the start of 2024. He joined the company in 2020 after four years at the then Campbell Soup Co. and another four at Mondelez International. Abrams-Rivera's career has, in a way, come full circle, with his CV including more than a decade at the former Kraft Foods Group from 1998 to 2010. He succeeded Miguel Patricio as Kraft Heinz CEO after the Portuguese stabilised the company somewhat after a troubling period for the baked beans and soup manufacturer. However, despite Patricio's efforts to get Kraft Heinz on firmer footing, Abrams-Rivera faced challenges upon taking the hot seat, not least seeing if he could return the company's closely-watched volume/mix sales metric to growth. So far, that has proved elusive. This embedded content is not available in your region. 2024 was another year in which Kraft Heinz's sales declined across a number of metrics and it was 12 months Abrams-Rivera described as 'challenging' when the company reported its annual results in the February. Kraft Heinz's top line, Abrams-Rivera said, was 'below our expectations', though he sought to accentuate the positives. 'We remained disciplined in protecting profitability, while driving industry-leading margins, generating strong cash flow, and returning $2.7bn in capital to stockholders.' However, the first quarter of the new year also proved tough, with net sales dropping 6.4% on a reported basis in the first quarter of 2025 and declining 4.7% in organic terms to just shy of $7bn. In the three months to 29 March, operating income decreased 8.1% to $1.2bn. Net income stood at $712m versus $801m a year earlier. Alongside the first-quarter numbers, Kraft Heinz also cut its 2025 outlook across a range of metrics to factor in the potential upward pressure on input-cost inflation from changes in tariffs. 'There can be no assurance that the company's assessment process will result in any transaction, or any assurance as to its outcome or timing,' Kraft Heinz said in its statement on Tuesday. 'The company has not set a timetable for completion of this process and does not intend to make any further announcements regarding the process unless and until it determines that further disclosure is appropriate or necessary.' However, Kraft Heinz's announcement sparked speculation on Wall Street about the different options the company could consider. And, after a series of stories in recent years about Kraft Heinz looking at disposals – and managing to find buyers for some assets – it was understandable the reaction among analysts centred on the possibility of more parts of the company being divested. Robert Moskow, an analyst covering Kraft Heinz at investment bank TD Cowen, said he took the company's announcement 'to mean more divestitures'. Moskow, who believes Kraft Heinz should "slim down" its portfolio, said it was TD Cowen's 'understanding' the company 'has considered selling coffee and meats in the past', although he noted it was 'unclear at this time whether today's announcement marks an acceleration in these efforts'. Last year, The Wall Street Journal and Reuters said the company was exploring a sale of its Oscar Mayer meat-products business. In 2019, it was reported Kraft Heinz was trying to sell its Maxwell House coffee brand but struggling because of what appeared to be an inflated price tag. When weighing up what Kraft Heinz may now look to offload, it's critical to understand how the company groups its assets together. Kraft Heinz has shuffled its assets into three groups dubbed 'accelerate', 'protect' and 'balance'. At the CAGNY investment conference in Florida in February 2024, Kraft Heinz outlined the attributes of each group. The 'balance' side of the business includes the business' meats, cheese and coffee brands. It was said to enjoy 'high' market shares but margins were deemed to be 'low' in 'flat' categories. Private-label was also described as 'high, with exposure to commodity-driven volatility'. 'We believe the company will prioritise selling brands in the 'balance' platform of its portfolio, representing about 24% of sales,' Moskow said. 'In the same [CAGNY] presentation, they also described coffee, meats, and cheese as low on 'market attractiveness' and meats and coffee as low on 'right to win'.' Bernstein analyst Alexia Howard echoed Moskow's thoughts, pointing to brands like Oscar Mayer and Lunchables. She suggests the sales of Lunchables have suffered in the wake of research by US non-profit Consumer Reports that led to the removal of the brand from school-lunch menus. 'Oscar Mayer and Lunchables, which former CEO Mr. Miguel Patricio considered a highly strategic part of the portfolio, given its protein-rich products and potential to create a stepping stone to more healthy longer-shelf life refrigerated snacks like P3 protein packs and beyond, now seem to be weighing the portfolio down,' Howard said. In her a note to clients, however, Howard also put forward the idea of a couple of bolder moves. 'A somewhat larger scale idea could be to spin-off the faster-growing legacy Heinz business,' she suggests, estimating that part of Kraft Heinz represents around a quarter of the company's total sales. When Kraft Foods Group and HJ Heinz combined a decade ago, a central rationale – as per the then playbook of 3G Capital – was 'cost synergies rather than any deeper strategic logic', Howard said. 'With Kraft Heinz now trading at just 8.8x next-twelve-months EBITDA, it could be argued that a faster-growing Heinz might be valued by the market at a higher multiple than the base Kraft business but obviously cost dis-synergies could be dilutive.' On a grander scale, Howard also outlines another scenario: a combination with another major US-centric food group such as General Mills or Conagra Brands. The prospect of further consolidation in the US food industry has been the subject of much chatter since Mars' move for Kellanova last year and the macro backdrop could, Howard suggests, provide the conditions for similar deals. 'The US packaged food sector is still the most fragmented space among staples sectors in the developed world and a merger of equal activity could occur as top- and bottom-line pressures play out,' Howard says. 'Past deals suggest that the average expected level of cost synergy from mergers is around 8% of the acquired company's sales in overlapping regions, which suggests that for US-centric food companies, a lot of money is being left on the table. Such a boost to EPS growth could be very attractive for a set of companies that are currently struggling with multiple headwinds including rising consumer interest in longevity and hence shunning of heavily-processed foods, which is being exacerbated by both RFK Jr.'s Make America Healthy Again initiative as well as the arrival of GLP-1 weight-loss drugs.' Larger-scale consolidating transactions would provide a greater opportunity for cost savings and we believe Kraft Heinz would be well suited for integrating businesses Matthew Smith, Stifel Stifel analyst Matthew Smith has similar thoughts. '[The US packaged-food industry's] fundamentals remain challenged primarily by weak consumption trends across centre-of-store categories,' he said. 'While we believe Kraft Heinz and peers are focused on smaller transactions in the near term to improve their portfolios, we believe the likelihood of an investment cycle and margin reset is building. 'Larger-scale consolidating transactions would provide a greater opportunity for cost savings and we believe Kraft Heinz would be well suited for integrating businesses leveraging its investment spending over the past five years and track record of unlocking productivity savings.' And it is important to note Kraft Heinz, while very likely to be considering offloading assets, could also be in the market for smaller acquisitions, too. It would be wrong to say the company has solely shedded assets in recent years. Businesses in Brazil and Turkey have been added to the portfolio. Condiments, sauces and snacks could be areas Kraft Heinz's management might evaluate, Smith suggests. 'Kraft Heinz already holds high market shares in these platforms and the gross margin and expected growth rates of the categories are attractive,' he adds. Kraft Heinz also said on Tuesday representatives of Berkshire Hathaway, the investment vehicle owned by Warren Buffett, were stepping down from the company's board. Berkshire Hathaway owns just over 27% of Kraft Heinz. The group said the departures 'are not the result of any disagreement with management or the board related to the company's operations, policies or practices'. Might another change be the exit of Berkshire Hathaway from the Kraft Heinz share roster, especially as Buffett is set to step down as the investor's CEO this year? Berkshire Hathaway came on board at the time of the 2015 deal that created Kraft Heinz. Ten years on, we could be set to see more significant change at one of the world's largest food and drinks manufacturers. "Disposals – and M&A – on cards as Kraft Heinz looks to craft new future" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
The Kraft Heinz Company (KHC) Exploring M&A Opportunities Amid Changing Consumer Trends
The Kraft Heinz Company (NASDAQ:KHC) has been looking for potential strategic transactions over the last several months, the company has announced. CEO Carlos Abrams-Rivera was quoted as follows in a press release shared on Tuesday: 'At Kraft Heinz, our goal has always been to make high-quality, great-tasting food for all and to keep consumers at the forefront of all we do, enabling us to drive profitable long-term growth and value creation. Consistent with this goal, over the past several months, we have been evaluating potential strategic transactions to unlock shareholder value. As we look to the future, we will continue to inspire and delight consumers with our iconic brands, fulfilling our mission.' The recent development comes amid weakening demand for The Kraft Heinz Company (NASDAQ:KHC)'s snacks and ready-to-eat meals due to higher prices and an uncertain economic environment, which is forcing consumers to seek affordable options. There has also been a noticeable shift toward healthier foods and weight-loss drugs, resulting in waning demand for packaged meals. A closeup of an assembly line worker inspecting a newly produced jar of condiments and sauces. According to a report in October last year, several buyers, including Mexico's Sigma Alimentos and Brazilian meatpacker JBS, were eyeing The Kraft Heinz Company (NASDAQ:KHC)'s hot dogs and cold cuts business, Oscar Mayer. Sources told Reuters that the deal could fetch an estimated $3 billion if it goes through. On April 29, The Kraft Heinz Company (NASDAQ:KHC) slashed its full-year organic sales and profit guidance, citing a 'volatile' operating environment. However, analysts believe the cuts were not surprising given the economic and political uncertainty. While we acknowledge the potential of KHC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than KHC and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: ChatGPT Stock Advice: Top 12 Stock Recommendations and 10 Cheap Rising Stocks to Buy Right Now. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-05-2025
- Business
- Yahoo
Kraft Heinz looking at M&A opportunities as packaged foods demand slows
(Reuters) -Packaged foods giant Kraft Heinz said it was looking at strategic transactions as consumer demand for its pricey snacks and ready-to-eat meals weakens due to an uncertain economic environment and high inflation. The company has been looking for potential merger and acquisition opportunities "over the past several months", chief executive officer Carlos Abrams-Rivera said in a statement. Consumers are turning to healthier processed food products and a surge in the use of weight-loss drugs has also cast a shadow on demand for packaged foods. Additionally, tariffs were adding to Kraft's woes as it lowered its annual organic sales and profit forecasts last month. Its hot dogs and cold cuts business, Oscar Mayer, was attracting interest from several buyers for a deal that could be worth $3 billion, Reuters reported in October last year. The company declined to comment further on the nature of the strategic transactions. Kraft Heinz also said Timothy Kenesey and Alicia Knapp, executives at Berkshire Hathaway-owned companies, were leaving the board of directors after Warren Buffett's conglomerate said it would no longer hold board seats. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
20-05-2025
- Business
- Business Wire
The Kraft Heinz Company Announces Ongoing Evaluation of Strategic Transactions to Unlock Shareholder Value
PITTSBURGH & CHICAGO--(BUSINESS WIRE)--The Kraft Heinz Company (Nasdaq: KHC) ('Kraft Heinz' or the 'Company') today announced that the Company's Board of Directors and Executive Leadership Team have been evaluating potential strategic transactions to unlock shareholder value. 'At Kraft Heinz, our goal has always been to make high-quality, great-tasting food for all and to keep consumers at the forefront of all we do, enabling us to drive profitable long-term growth and value creation,' said Kraft Heinz CEO Carlos Abrams-Rivera. 'Consistent with this goal, over the past several months we have been evaluating potential strategic transactions to unlock shareholder value. As we look to the future, we will continue to inspire and delight consumers with our iconic brands, fulfilling our mission.' Kraft Heinz today also announced that Berkshire Hathaway Inc. (together with its affiliates, 'Berkshire Hathaway') has informed the Company that, consistent with its other non-controlled investments, it will no longer hold Board seats on Kraft Heinz. As such, Timothy Kenesey and Alicia Knapp have stepped down from the Board due to their relationship with Berkshire Hathaway. With these changes, Kraft Heinz has reduced the size of its Board to 10 members. Miguel Patricio, Chair of the Board of Kraft Heinz, said, 'On behalf of the Board, I'd like to thank Tim and Alicia for their commitment and contributions to Kraft Heinz over the years. We greatly value our strong history with Berkshire Hathaway and look forward to continuing our relationship.' Mr. Kenesey's and Ms. Knapp's decisions are not the result of any disagreement with management or the Board related to the Company's operations, policies or practices. Kraft Heinz intends to continue its evaluation of strategic transactions to unlock shareholder value. There can be no assurance that the Company's assessment process will result in any transaction, or any assurance as to its outcome or timing. The Company has not set a timetable for completion of this process and does not intend to make any further announcements regarding the process unless and until it determines that further disclosure is appropriate or necessary. ABOUT THE KRAFT HEINZ COMPANY We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let's Make Life Delicious. Consumers are at the center of everything we do. With 2024 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of eight consumer-driven product platforms. As global citizens, we're dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways. Learn more about our journey by visiting or following us on LinkedIn. Forward-Looking Statements This press release contains a number of forward-looking statements. Words such as 'anticipate,' 'believe,' 'continue,' 'expect,' 'will,' and 'focus' and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding the Company's evaluation of potential strategic transactions. These forward-looking statements reflect management's current expectations and are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond the Company's control. Important factors that may affect the Company's business and operations and that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, whether the objectives of the evaluation of strategic transactions will be achieved; the terms, structure, benefits and costs of any action or transaction resulting from the evaluation; the timing of any such action or transaction and whether any such action or transaction will be consummated at all; the risk that the evaluation and its announcement could have an adverse effect on the ability of the Company to retain and hire key personnel and maintain relationships with customers, suppliers, employees, shareholders and other business relationships and on its operating results and business generally; the risk the evaluation could divert the attention and time of the Company's management; the risk of any unexpected costs or expenses resulting from the evaluation; and the risk of any litigation relating to the evaluation, as well as the risks and uncertainties described in the Company's risk factors, as they may be amended from time to time, set forth in its filings with the Securities and Exchange Commission. The Company disclaims and does not undertake any obligation to update, revise, or withdraw any forward-looking statement in this press release, except as required by applicable law or regulation.
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.
