The Kraft Heinz Company KHCposted first-quarter 2018 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same. Higher input costs, lower sales in the United States along with higher investments to boost capabilities seemed to have adversely affected this food company’s quarterly performance.
However, lower taxes and higher pricing have benefited the results.Shares of Kraft Heinz have gained 3.9% in the after-hour trading session on May 2, following the earnings release.
In the first quarter, the company re-aligned some of its international businesses. It formed a new reportable segment — Europe, Middle East, and Africa (“EMEA”) by shifting Middle East and Africa businesses from the historical Asia Pacific, Middle East, and Africa (“AMEA”) operating segment to the historical Europe reportable segment. Now, the remaining AMEA operations became the Asia Pacific (“APAC”) operating segment.
Earnings
Adjusted earnings per share of 89 cents surpassed the consensus mark of 82 cents. Also, the bottom line increased 6% from the year-ago figure on lower effective tax rate.
Sales
Reported sales of $6.3 billion fell marginally short of the Zacks Consensus Estimate of $6.35 billion by 0.7%. The top line also declined 0.3% year over year owing to soft consumer demand in North America and Rest of World. The reported figure includes a favorable 1.2% impact from currency. Organically, sales decreased 1.5%.
Volume/mix declined 2.5% compared with a decrease of 1.6% in the fourth quarter. This was due to lower shipments across several categories in the United States as well as Rest of World. That said, Canada and EMEA registered solid retail growth in the quarter. Foodservice also gained in the United States and EMEA in the quarter.
Pricing was up 1%, same as the preceding quarter, driven by price improvement in Rest of World markets and the United States.
Operating Highlights
Gross profit of $2.2 billion increased 2.1% year over year.
Adjusted EBITDA was down 2.7% to $1.8 billion in the quarter due to higher input costs, lower volume/mix and more spending in strategic initiatives.