USA – Kraft Heinz, the third largest food and beverage company in North America, recently released its Q4 and full-year 2022 results which exceeded Wall Street’s earnings and sales expectations.
For Q4 2022 ended on December 31st, the company reported net sales of US$7.38 billion, a 10% increase year-on-year. This is against the expected US$7.2 billion in net sales.
The net income for the quarter was US$887 million, an increase of 447.9%, compared to the prior year in which they recorded a US$255 million loss. Their adjusted earnings per share was 85 cents, against the 78 cents predicted by analysts.
For the whole year, the company’s sales increased by 1.7% at US$26.5 billion, while net income grew by 133.4% at US$2.4 billion.
This growth is attributed to the increase in pricing in Q422 by 15.2% which more than offset the 4.8% decline in volumes due to price pressures and supply constraints within the market.
While struggling with rising commodity costs and supply chain values, most packaged food companies have hiked their prices over the last two years.
No more price hikes for 2023
Kraft Heinz, however, announced that they are almost done with increasing prices saying that 95% of their pricing is already accepted and that they have already implemented 90%.
The company’s CEO, Miguel Patricio said, “From a pricing perspective, 99% of all needed pricing has already been announced for 2023.
As we look to the rest of the year, we have no current plan to announce new pricing in North America, Europe, Latin America and most of Asia.”
In the company’s North American region, there was a 5% decline in volume for Q422 and a 3.4% decrease for the entire 2022 fiscal year.
According to John Baumgartner, a US-based analyst at Japanese investment bank Mizuho Securities, the company’s results for the 2022 fiscal year were a “solid delivery” and the outlook is “very encouraging”.
He said, “Underlying momentum is evident in its strong close to FY-22, with market share continuing to outperform other brands gaining across all income tiers.”
The Heinz Ketchup and Kraft cheese manufacturer expects organic net sales growth of 4% to 6%, in 2023, slightly above analysts’ estimates of 4.8%, and anticipates high-single digit inflation.
They also expect adjusted earnings of US$2.67 and US$2.75 per share for the year, which is below analyst estimates of $2.77 per share, according to Refinitiv.
During the earnings presentation, CEO Miguel also announced that the company has entered a multi-year agreement with IHOP, an American restaurant chain, to sell its coffee.
“This is an example of how we’re taking new and unexpected approaches within some of our product categories,” Miguel Patricio said.
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