UPDATE 3-Kraft Heinz beats quarterly estimates as prices soar
(Add analyst comment, update shares)
By Mehr Bedi and Granth Vanaik
October 26 (Reuters) –
On Wednesday, Kraft Heinz Co announced a surprise increase in quarterly revenue and beat its profit estimates as the Philadelphia-based Jell-O and cream cheese maker benefited from price increases and better supply from retailers. .
The results follow those of General Mills and Kellogg and highlight that multiple price increases over the past year to counter higher labor, ingredient and transportation costs have yet to significantly weighed on demand.
Kraft said average selling prices rose 15.4 percentage points in the third quarter, but sales volumes fell 3.8 percentage points.
“Sales were strong, with volumes slightly lower than Street’s model and higher prices,” JP Morgan analyst Ken Goldman said in a note.
Packaged food makers are also getting a boost from inflation-weary consumers sticking to the pandemic-fueled preference for cooking at home, though analysts have warned companies could be approaching their price increase ceiling.
Kraft chief executive Miguel Patricio said there was continued growth in consumption at all income levels during the quarter, with market share gains in categories such as Lunchables and Kraft Mac. & Cheese cups, as the company had increased capacity by addressing supply chain constraints.
Kraft’s market share is directly related to shelf availability, said CFRA analyst Arun Sundaram, adding that “if they put products on the shelves, the consumer buys them despite the price increases.”
Net sales reached $6.51 billion from $6.32 billion a year earlier. Analysts on average had expected $6.27 billion, according to IBES data from Refinitiv.
Excluding items, earnings of 63 cents per share beat expectations of 56 cents.
Shares of the company reversed course to trade slightly lower amid a broader market decline. (Reporting by Mehr Bedi and Granth Vanaik in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)