Shares of Kraft Heinz Co. (KHC) dropped 0.9% in premarket trading on Wednesday, reaching a five-week low. The company, known for its popular brands such as Heinz ketchup, Jell-O, and Cheez Whiz, reported second-quarter sales that fell short of expectations. Despite an 11% increase in pricing, a 7% decline in volume and mix, along with market share pressure, resulted in disappointing financial results.
Strong Net Income Growth
However, net income saw a significant rise to $1.00 billion, or 81 cents per share, compared to $265 million, or 21 cents per share, in the same period last year. Adjusted earnings per share, excluding nonrecurring items, came in at 79 cents, surpassing the FactSet consensus of 76 cents.
Modest Sales Growth
While sales experienced modest growth of 2.6% to $6.72 billion, it still fell short of the FactSet consensus of $6.80 billion. North America sales increased by 0.8% to $5.08 billion, while international sales saw a more substantial growth of 8.5% to $1.64 billion.
Kraft Heinz reaffirmed its adjusted EPS guidance range of $2.83 to $2.91 for 2023. CEO Miguel Patricio expressed confidence in the company’s performance, stating that despite the challenges faced in the second quarter, their action plans have resulted in month-by-month improvement in market share.
Over the past three months, Kraft Heinz’s stock has declined by 9.1%, contrasting with the S&P 500’s gain of 11.1%.