US-based food major Kraft Heinz has tweaked up its profit guidance for the year and provided an outlook for sales to reflect the “continuation of our strong growth into the third quarter”.
The soups and sauces manufacturer reported third-quarter results today (29 October), with organic net sales and adjusted EBITDA beating its own forecasts for the three months to 26 September.
Having previously guided to a mid-single-digit increase in sales for the quarter from 7.4% in the prior three months, Kraft Heinz booked a 6.3% increase in organic terms and 6% on a reported basis to US$6.44bn.
Adjusted EBITDA rose 13.5% to $1.66bn, superior to the high-single digit outlook.
“Based on performance to date, the company believes mid-single digit organic net sales growth, and high-single digit constant currency adjusted EBITDA growth versus the prior year period are reasonable expectations for fourth-quarter performance,” the owner of the Philadelphia cheese brand said.
“This would result in mid-single digit organic net sales growth and high-single digit constant currency adjusted EBITDA growth for the full year.”
At an investor day in September, chief executive Miguel Patricio had provided an outlook for mid-single digit growth for EBITDA this year as he revealed a new transformation strategy and the creation of six “consumer-driven platforms”.
Commenting on the latest set of results, Patricio said: “The continuation of our strong growth into the third quarter is a reflection of the agility we are creating as an organisation and because of that we are raising our outlook for the full year.
“We are building momentum and we are confidently optimistic about our near-term performance. We are heading into 2021 with our new operating model fully implemented, our platform strategy coming to life in the marketplace, and our growth investments ramping up.”
Patricio also declared in September he was selling select cheese assets – including the brands Breakstone’s and Athenos – to French dairy giant Lactalis amid efforts to simplify Kraft Heinz’s portfolio and raise new capital for growth.
However, the costs associated with that sale contributed to Kraft Heinz’s net earnings dropping 33.7% to $597m.
Operating income also fell, and was down 2.8% at $1.1bn.
Over the nine months, sales climbed 4.4% to $19.2bn and were up 6.7% on an organic basis. Adjusted EBITDA rose 8.5% to $4.88bn.
Both operating and net income declined, with the former down 76.7% at $578m. Net income turned to a $676m loss, compared to a $1.75bn profit a year earlier.