Kraft Heinz saw its net sales decline by 0.96% last year to $26.23 billion as its North American businesses underperformed.
In the fourth quarter of the year, sales were up 0.3% to $6.89 billion, while income surged from $944 million to $8 billion, which reflected a benefit from the US tax overhaul.
The company continues to lose ground in the US, which accounts for nearly 70% of its total business. In the final three months of the year, sales shrunk by 1.1%, partly due to a poor performance of its Planters nut brand. Cold cuts and cheese sales were also down.
However, Kraft Heinz said that these losses were partially offset by innovation-led growth in Lunchables and Capri Sun ready-to-drink beverages.
Its Canada business posted 4.1% lower sales in the fourth quarter due to a discontinuation of select cheese products and lower shipments of coffee.
Strong growth in China and Indonesia meant that net sales rose 5.2% in the fourth quarter of its rest of the world unit. Meanwhile, European sales were up 9.3% thanks to demand for condiments and sauces in Germany, Spain and France.
Kraft Heinz CEO Bernardo Hees said: “There’s no question that our financial performance in 2017 did not reflect our progress or potential. We made significant improvements in many of our businesses, and were able to accelerate some important business investments at the end of the year. This, together with benefits from the US Tax Cuts and Jobs Act and additional investments in our capabilities, should help further advantage our brands and grow our business in 2018 and beyond.”
David Knopf, Kraft Heinz CFO, added: “Since the HR-1 Tax Cuts and Jobs Act was signed into law, we have already taken actions and are accelerating key business initiatives. This includes approximately $300 million in strategic investments to build our capabilities, our people skills and our brands; more than $800 million in capital expenditures to improve quality, safety and capacity; as well as $1.3 billion to pre-fund our post-retirement benefit plans.”
In the final quarter of the year, Kraft Heinz sold its 50.1% stake in its South African operations to its joint venture partner Pioneer Foods.
© FoodBev Media Ltd 2020
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