Kraft Heinz CEO Bernardo Hees pointed to sequential improvement in the US giant’s results in its fiscal second quarter as the baked beans and ketchup maker posted a fall in first-half sales.
The company booked a 2.4% decrease in net sales to US$13bn for the six months to 1 July. In May, Kraft Heinz said its first-quarter net sales had fallen 3.1%.
“As expected, our second-quarter results were sequentially better than our first quarter, and we expect this momentum to continue into the second half of the year,” Hees said. “Our plan from the start has been to drive strong cost savings to fuel investments in people, capabilities and brands that can lead to sustainable, profitable growth. That’s what we see happening now, and expect to continue going forward.”
The business, which owns brands including Heinz tomato ketchup and Oscar Mayer hot dogs, reported a 10.2% rise in first-half operating income to $3.47bn. Its net income was up 23.2% at $2.05bn.
On an organic basis, Kraft Heinz’s first-half net sales fell 1.8%, which did mark an improvement in the second quarter on the company’s performance in the opening three months of 2017, when sales by that metric dropped 2.7% year-on-year.
Looking at the sales performance of Kraft Heinz’s reporting segments, each saw a decline in the first half of the year, even allowing for the company’s decision late in 2016 to move its Russian business from its Rest of World division to its Europe unit.
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On an organic basis, the only segment to see its sales rise was Rest of World, which reported growth of 5.4% – and that was helped by pricing in the second quarter to offset higher input costs, particularly in Latin America.
In the US, Kraft Heinz saw its organic sales fall 1.2% in the second quarter and in the opening six months as a whole. In the second quarter, volumes dipped 0.8% amid “select distribution losses” in cheese and meats, as well as lower shipments in foodservice.
In Europe, Kraft Heinz’s organic sales dropped 0.8% in the second quarter, contributing to a 0.5% dip in the first half. Kraft Heinz, which only provided commentary on the second-half performance of its units, said its volume/mix in Europe increased 0.8 percentage points, boosted by “strong consumption gains” in condiments and sauces and improvement in foodservice.
In Canada, the company’s first-half sales slid 8.3% on an organic basis. Sales in the second quarter dropped more than 3%, not as stark as the 15% decline seen in the first quarter of the year, which had been caused by the “later implementation of go-to-market agreements with key retailers”.
Second-quarter volume/mix in Canada increased 0.6%, as growth in condiments and sauces more than offset the discontinuation of certain cheese products.