Kraft Heinz triumphs in 2021 despite suffering losses in quarter four 

USA – American multinational food company, The Kraft Heinz Co., rose above fourth quarter challenges to record an impressive 184% surge in fiscal 2021 when compared with fiscal 2020.  

Net income for the year ended Dec. 25, 2021, totaled US$1 billion, equal to 83¢ per share on the common stock, and an improvement over the year prior when the company earned US$356 million, or 29¢ per share. 

Fiscal 2021 sales were essentially flat at US$26 billion, down from US$26.1 billion in fiscal 2020.  

The dismal performance in sales was partly due to divestitures of the Planters nut business and some of its cheese brands and assets.  

But the results masked difficulties during the fourth quarter that led the company to record a quarterly loss and indicate some of the challenges will last into the second quarter of fiscal 2022. 

Kraft Heinz recorded a loss of $257 million during the fourth quarter that compared unfavorably to the same period of the previous year when the company earned $1 billion, or 84¢ per share.  

The loss primarily was caused by a $1.3 billion non-cash impairment charge against the Kraft brand following the closing of the cheese transaction with Lactalis Group. 

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Other issues that affected the business in the quarter include one-time supply challenges, production constraints for some products, and product categories in need of an updated go-to-market strategy. 

A lack of packaging materials and a shortage of labor affected both the Philadelphia Cream Cheese and Oscar Mayer brands, respectively, during the quarter. The company expects both brands to recover during the first quarter. 

Quarterly sales were US$6.7 billion, down from US$7 billion during the same period of the previous year. 

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Capacity constraints limited the production of Heinz gravy and Lunchables, but the company is working to ease the constraints and expects the issues to be resolved by the end of the second quarter. 

Carlos Abrams-Rivera, president of Kraft’s North America business unit said Kraft Heinz noted that some brands need a strategic update to deliver strong demand. 

Mr. Abrams-Rivera added that, overall, Kraft Heinz needs to do a better job anticipating demand and forecasting more accurately and, as a result, holding on to market share. 

For fiscal 2022, Kraft Heinz is guiding organic net sales growth of 1% to 2%. In fiscal 2021, organic net sales rose 1.8%. Adjusted EBITDA is forecast to be in a range of $5.8 billion to $6 billion. 

To meet its organic sales growth, target the company will focus on retaining customers and trips gained during the COVID-19 pandemic. 

The company is also working to achieve share gains in foodservice channels, double down on the ongoing emerging markets expansion and continue with pricing actions to mitigate effects of inflation. 

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