Shares in Kraft Heinz sank by 6% after the US firm missed earnings estimates in its third-quarter results, due in part to high commodity costs.
The company – which owns brands such as Philadelphia cream cheese, Maxwell House coffee and Oscar Mayer meats – saw its adjusted EBITDA shrink by 14.4% to $1.62 billion, which was driven by investments in strategic capabilities, higher overhead costs and input costs.
However, net sales for the quarter were up 1.6% to $6.38 billion as its rest of the world segment performed well.
In the US – which accounts for over two-thirds of the company’s business in terms of sales – revenue was up 1.4%. Adjusted EBITDA decreased 16.2%.
Canada net sales were $525 million, 5.6% lower than the year-ago period.
Kraft Heinz CEO Bernardo Hees said: “We believe that our Q3 results are strong evidence that our commercial investments are working, with solid top-line performance in the quarter.
“This reflects our strong pipeline of marketing, new product and whitespace initiatives now in the marketplace, backed by investments in capabilities we have been making for brand and category advantage.
“While a number of one-off factors – as well as our desire to insure customer service – held back profit in the quarter, we remain confident that we are well-positioned to deliver sustainable, profitable growth going forward.”
During the quarter, Kraft Heinz announced a £20 million investment at its facility in Wigan, UK, to expand production of canned food products. It also released Mayochup in the US, a blend of mayonnaise, ketchup and spices.
And last week, the company agreed to sell a range of its Indian brands, including children’s milk drink Complan, to Zydus Wellness for around INR 46 billion ($628 million).
© FoodBev Media Ltd 2019