- Sales drop 0.2% to US$4.35bn
- Operating income down 18%, net earnings drop 16.4%
- Analysts upbeat on cost-cutting drive
Kraft Foods Group booked lower first-quarter earnings as sales volumes remained pressured and expenses associated with cost cutting initiatives and the proposed Heinz merger dented the bottom line.
Net revenues were down 0.2%. Organic sales rose 1.1% on higher pricing. Volume mix remained "essentially flat", Kraft said.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Kraft's net income fell 16.4% to US$429m in the period to 28 March, from $513m last year. Operating income was down 18.1% to $740m.
Results included a number of one-time charges associated with cost cutting measures and the group's proposed merger with Heinz. These included a non-cash loss of $77m from pension costs, $38m in cost saving investments and $17m related to the Heinz merger.
Morningstar analyst Erin Lash said that the firm's cost saving efforts were a positive. "Despite the lacklustre volume performance… we view the firm’s efforts to extract costs from its operations positively," she wrote in an investor note. "We continue to believe Kraft will keep a stringent eye on taking costs out of the business, while also reinvesting behind its brand mix–efforts that we expect will persist once Kraft and Heinz combine."
Kraft shares slid 0.87% in after hours trading yesterday (29 April).
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
