Kraft Heinz posted a fourth straight quarter of missed sales targets this week as it continued to battle sluggish demand for its products.
Net sales were down 4.1% to $6.6bn in the three months to 28 December, as higher prices pushed shoppers away to cheaper alternatives. It meant sales for the full year were down 3% to $25.8bn.
The company is now forecasting revenue to fall by up to 2.5% in 2025 while the profit outlook is lower than expectations. This does not account for the potential impact of a tariff war or stricter food regulations, the company said.
Its share price fell 4% in the aftermath of the results but later recovered. It is down over 20% in the last year.
“Kraft Heinz might produce the types of products that are a staple in everyone’s homes, but its latest financial results were a real turnoff,” said Dan Coatsworth, investment analyst at AJ Bell.
“It’s what’s coming down the line that stopped people wanting to shop for its shares, rather than what’s just been achieved.”
Its volumes fell 4.1% in the quarter, offset slightly by prices rising 1%.
“The recovery in sales is taking longer than expected,” said Arun Sundaram, an analyst with CFRA research. “In 2025, the company will likely need to invest in price to improve the performance of underperforming brands including Capri Sun.”
The company has so far boosted its marketing efforts and invested in technology, but coupled with higher manufacturing and labour costs, this pushed down its gross profit margin by 40 basis points to 34.4% in the quarter.
This year, Kraft Heinz said it will invest in cutting prices this year while boosting marketing, although in a call with analysts, executives said promotions are not as effective as they once were.
“There are places where we are contemplating base price changes instead of simply a promotion,” said CFO Andre Maciel, according to Bloomberg.
Organic net sales in North America, by far its biggest market, fell 3.9% to $5bn. Across other international developed markets – including the UK – revenue fall 3.6%. These countries make up just 13% of the business’s annual sales.
“Although 2024 was a challenging year with our top line results coming in below our expectations, we remained disciplined in protecting profitability while driving industry-leading margins,” said CEO Carlos Abrams-Rivera.
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