KHC - Kraft Heinz sees consumers push back on pricing in Q2

2023-08-02 07:15:57 ET

Kraft Heinz Company ( NASDAQ: KHC ) reported organic sales rose 4.0% in Q2, with an 11.0% rise in pricing offsetting a sharp 7.0% decline in volume. The organic sales tally was short of the consensus estimate of +4.6%. Organic sales were up 1.3% for the North America business and rose 13.2% for the international business.

Total sales increased 2.6% year-over-year during the quarter to $6.72B, including a negative 1.2 percentage point impact from foreign currency and a negative 0.2 percentage point impact from acquisitions and divestitures.

Adjusted EBITDA increased 6.0% year-over-year to $1.6B, primarily driven by higher pricing and efficiency gains. Adjusted EPS was up 12.9% to $0.79 to top the consensus mark of $0.76. The boost in EPS was tied to higher adjusted EBITDA, lower taxes on adjusted earnings, and lower interest expense. Those factors more than offset unfavorable changes in other expenses.

Kraft Heinz ( KHC ) noted that the volume drop during the quarter was primarily driven by elasticity impacts from pricing actions. "While we did face headwinds in the second quarter, particularly within U.S. market share performance, the action plans we laid out in the first quarter resulted in share trend improvement each month," noted CEO Miguel Patricio. "We expect these action plans, along with continued strong execution from our teams, to drive momentum through the second half of the year," he added.

Looking ahead, Kraft Heinz ( KHC ) sees organic sales growth of 4% to 6% for the full year vs. +4.9% consensus. Adjusted EPS of $2.83 to $2.91 is anticipated vs. $2.89 consensus.

Shares of Kraft Heinz ( KHC ) fell 1.20% in premarket action to $35.45.

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