Kraft and Heinz products
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Kraft Heinz reported quarterly earnings on Thursday, topping analysts' expectations, but sales continued to decline as executives formulate a turnaround plan.
Shares in the company jumped 11.3% in morning trading. As of Wednesday's closing, the shares were down about 33% this year, giving the food company a market value of $ 34.8 billion.
"While the third quarter results are still below our potential, we showed sequential improvement towards the first half, and I think we are starting to run our business better," CEO Miguel Patricio said in a statement. "We are making good progress in identifying and addressing the main causes of past performance, as well as setting our strategic direction."
The company develops a plan for 2020 to revive Kraft Heinz's business, which has struggled to stop sales and declining profits.
This is what the company reported compared to what Wall Street expected, based on a survey of Refinitive analysts:
- Revenue: per share: 69 cents, adjusted, against 54 cents expected
- Revenue: USD 6.08 billion versus $ 6.1[ads1]3 billion expected
Kraft Heinz reported third quarter financial income of $ 899 million, or US $ 74 per share, up from US $ 619 million, or US $ 50 per share, the previous year.
Excluding profits from the sale of its Canadian cheese business, restructuring costs and other goods, the food giant earned 69 cents per share on an adjusted basis, topping the expected 54 cents per share. Lower interest expense than expected as a result of refinancing helped to raise revenues.
In August, Kraft Heinz withdrew its full-year forecast for 2019 after reporting poor results in the second quarter. The company refused to provide an updated view on Thursday. CFO Paulo Basilio, who returned to the role in September amid a broader executive shake, said investors should expect earnings and earnings to be "generally the same year over year" to third-quarter results.
Net sales in the third quarter fell 4.8% to $ 6.08 billion, missing expectations of $ 6.13 billion.
In the United States, which accounts for approximately 70% of Kraft Heinz's revenues, demand for the products continued to decline. Despite price increases for items such as Oscar Mayer's meatloaf, Philadelphia Cream Cheese and Lunchables, net sales for the company's home market fell by 1.6%.
Patricio told analysts during the conference call that the company is developing nine "transformation" projects that aim to streamline Kraft Heinz and improve revenue. The company plans to significantly increase media spend and improve its product development process.
"Innovation is an area that we need to improve dramatically," Patricio said.
He told analysts that in his previous role as head of marketing at Anheuser-Busch InBev, his team worked to reduce the timeline for bringing new products to market from two years to six months.