Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Kraft Heinz Co (KHC, Financial) reported first quarter results in line with expectations, demonstrating effective execution of their strategic plans.
- Achieved a 170 basis point expansion in adjusted gross profit margin due to successful efficiency initiatives, surpassing inflation impacts.
- Organic net sales in emerging markets grew by 5.5%, with the company expecting double-digit growth for the full year 2024.
- Continued to gain market share across all business segments, with improvements in both developed and emerging markets.
- Increased investments in marketing, R&D, and technology by 8%, 25%, and 20% respectively, supporting innovation and brand superiority.
Negative Points
- Organic net sales for The Kraft Heinz Co (KHC) declined by 0.5% overall, with volume/mix down by 3.2%.
- The Away-From-Home segment experienced flat growth due to industry softness and planned business exits in the U.S.
- In North America, organic net sales declined by 1.2% due to stronger-than-expected retail consumption offset by SNAP headwinds.
- International developed markets saw a 1.3% decline in organic net sales, influenced by retailer inventory reductions in Australia.
- Adjusted operating income and margin in emerging markets declined due to ramped-up investments, which may impact short-term profitability.
Q & A Highlights
Q: Can you provide an update on Kraft Heinz's overall business performance for the first quarter of 2024?
A: (Carlos A. Abrams-Rivera, CEO & Director) We delivered first quarter results in line with our expectations, with growth across our strategic pillars and continued sequential volume recovery despite a softening Away-From-Home market in the U.S. We also saw a 170 basis point expansion in adjusted gross profit margin and are on track to achieve our efficiency target of $2.5 billion by 2027.
Q: What are the expectations for Kraft Heinz's financial performance for the full year 2024?
A: (Carlos A. Abrams-Rivera, CEO & Director) We are reiterating our guidance for 2024, expecting low single-digit organic net sales growth and continued margin expansion. We anticipate delivering our long-term financial algorithm by the fourth quarter of this year.
Q: How did the North American Retail ACCELERATE Platforms perform in Q1 2024?
A: (Carlos A. Abrams-Rivera, CEO & Director) Our North American Retail ACCELERATE Platforms, which focus on taste elevation, easy ready meals, and substantial snacking, grew by 0.5% versus the prior year. We are targeting low single-digit organic net sales growth for these platforms for the full year 2024.
Q: What was the performance of the Away-From-Home segment in Q1 2024?
A: (Carlos A. Abrams-Rivera, CEO & Director) The Global Away-From-Home organic net sales growth was relatively flat, up 0.1% versus the prior year, impacted by a softening market in the U.S. However, we offset declines in the U.S. with continued growth in the rest of the world and expect low to mid-single-digit organic net sales growth for the full year 2024 in this segment.
Q: Can you discuss the performance and outlook for emerging markets?
A: (Carlos A. Abrams-Rivera, CEO & Director) In emerging markets, we grew organic net sales by 5.5% versus the prior year and expect to deliver double-digit organic net sales growth for the full year 2024. We continue to capture growth through our go-to-market model and the brand equity of Heinz.
Q: What are the key strategies driving Kraft Heinz's growth and efficiency?
A: (Carlos A. Abrams-Rivera, CEO & Director) Our growth strategy is centered around driving top-line growth by unlocking efficiencies and reinvesting in the business to power our superior brands. We are executing this through our strategic pillars, portfolio roles, and share performance across all business segments.
Q: How is Kraft Heinz addressing the challenges posed by the current economic environment?
A: (Carlos A. Abrams-Rivera, CEO & Director) Despite short-term volatility, including a pressured consumer and persistent inflation, we are well positioned to address these challenges through our portfolio of leading brands, investments in Agile@Scale for end-to-end efficiencies, and a disruptive innovation engine.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
