Kraft Heinz has reported a 0.5% net sales decline in the second quarter compared to the strong year ago period – a modest fall as households continue to buy packaged goods.
Net sales for the quarter stood at $6.62 billion, representing a 2.1% organic decline. For the three months ended 26 June, operating income was up 192.2% to $1.24 billion.
The company predicted current-quarter organic net sales to decline by low-single-digit percentage compared with 2020 when sales boomed due to stock-piling amid the pandemic.
While the results did not compare to an extraordinary Q2 2020, Kraft Heinz says consumption vs 2019 remained strong with a 5% organic increase as demand for snacks and packaged meals persisted.
The owner of Philadelphia cream cheese also said its second-quarter results benefitted from the recovery of the foodservice sector and positive pricing. Emerging markets also posted positive growth, however, the business is still witnessing ongoing declines in coffee.
Net sales for the US market stood at $4.74 billion, down 3.6%. The company’s International segment rose 8.3% to $1.41 billion, while Canada’s net sales increased 8.8% to $464 million.
“Our second quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered,” said Miguel Patricio, Kraft Heinz CEO.
In a management discussion, Patricio highlighted that “compared to 2019, nearly 2 million more households bought Kraft Heinz brands in the second quarter, boosting an already high household penetration rate, while repeat rates were up 8 percentage points”.
“Additionally, spending per buyer, and per trip, both increased by roughly 10% and 3%, respectively. And this is resulting in better performance against the competition, with 58% of our US retail business gaining share in Q2 versus 41% in Q1,” he continued.
Kraft Heinz says its US team is continuing to drive key strategic initiatives to transform the business including closing the sale of its nuts business to Hormel Foods this quarter, as well as completing its natural cheese divestment soon.
Meanwhile, in June, the company agreed to acquire Assan Foods in Turkey, which it says “serves as a steppingstone to accelerate [its] retail and foodservice growth across Europe, Middle East and Africa”.
For the third quarter of 2021, Kraft Heinz now expects a mid-single-digit percentage increase in organic net sales. The company continues to expect to deliver 2021 Adjusted EBITDA ahead of its strategic plan, and also now ahead of 2019.
© FoodBev Media Ltd 2021
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