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Kraft Heinz (KHC) Q2 Earnings Top Estimates, Sales Fall Y/Y
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The Kraft Heinz Company (KHC - Free Report) posted second-quarter 2022 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. However, earnings and net sales declined year over year. Yet, management highlighted that it is on track to navigate the near-term headwinds successfully as it continues to advance its long-term strategy. Quarterly results reflectsolid price realization and buoyant demand.
Management raised its organic net sales guidance for 2022 while reiterating the adjusted EBITDA outlook.
The Kraft Heinz Company Price, Consensus and EPS Surprise
Kraft Heinz posted adjusted earnings of 70 cents a share, beating the Zacks Consensus Estimate of 67 cents. However, quarterly earnings declined 10.3% year over year mainly due to reduced adjusted EBITDA. The impact of divestitures and escalated taxes were a downside. The downside was somewhat offset by reduced interest costs and positive changes in other expenses/(income).
The company generated net sales of $6,554 million, down 0.9% year over year. Net sales included an adverse impact of 9.3 percentage points from divestitures net of acquisitions and an unfavorable currency impact of 1.7 percentage points. Net sales beat the Zacks Consensus Estimate of $6,387.7 million.
Organic net sales increased 10.1% year over year. KHC stated that pricing rose 12.4 percentage points year over year, reflecting growth in all segments. The upside can be attributed to measures undertaken to counter increasing input costs. Volume/mix fell 2.3 percentage points as strong demand across retail and foodservice channels was offset by supply constraints and elasticity impacts from pricing actions. Management noted that unfavorable volume/mix in the North America division more than offset favorable volume/mix across the International unit.
Gross profit of $1,984 million declined 13.4% from $2,291 million reported in the year-ago quarter. Adjusted EBITDA fell 10.9% to $1,520 million, reflecting the adverse impact of divestitures and unfavorable currency translation. Management highlighted that adjusted EBITDA reflected increased pricing and efficiency gains, offset by escalated commodity costs as well as supply chain costs and unfavorable volume/mix.
Segment Discussion
North America: Net sales of $5,039 million declined 3.1% year over year. During the quarter, pricing moved up 13.1 percentage points, but the volume/mix fell 3.3 percentage points.
International: Net sales of $1,515 million were up 7.2% year over year. Pricing moved up 10.3 percentage points and the volume/mix inched up 0.7 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $1,518 million, long-term debt of $19,724 million and total shareholders’ equity of $48,796 million. Net cash provided by operating activities was $788 million for the six months ended Jun 25, 2022. The company generated a free cash flow of $353 million during this time.
In a separate press release, Kraft Heinz declared a quarterly dividend of 40 cents per share payable on Sep 23, 2022, to shareholders of record as of Aug 26.
Image Source: Zacks Investment Research
Guidance
Kraft Heinz expects to deliver robust financial performance in 2022. Management raised its organic net sales view for 2022. Management expects organic net sales to be up high-single-digit percent compared with the year-ago period. Earlier, management had expected the metric to be up mid-single-digit percent. The revised outlook reflects solid to-date performance and continuing momentum in the business.
Adjusted EBITDA is expected to be in the $5.8-$6 billion range, with a 45% to 55% third and fourth quarter split. The view reflects the 53rd week in 2022, unfavorable currency impact, effects of divestitures and solid organic net sales. The view also reflects Kraft Heinz’s continuing efforts to manage inflationary pressures.
This Zacks Rank #3 (Hold) stock has increased 7.2% in the past six months against the industry’s 1.6% decline.
Lamb Weston, which produces, distributes and markets value-added frozen potato products, sports a Zacks Rank #1 (Strong Buy) at present. LW has a trailing four-quarter earnings surprise of 18.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LW’s current financial year sales suggests growth of 9.3% from the year-ago reported number.
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2 (Buy). MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the corresponding year-ago reported figures.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2. GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of 2.2% and 1.5%, respectively, from the corresponding year-ago reported figures.
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Kraft Heinz (KHC) Q2 Earnings Top Estimates, Sales Fall Y/Y
The Kraft Heinz Company (KHC - Free Report) posted second-quarter 2022 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. However, earnings and net sales declined year over year. Yet, management highlighted that it is on track to navigate the near-term headwinds successfully as it continues to advance its long-term strategy. Quarterly results reflectsolid price realization and buoyant demand.
Management raised its organic net sales guidance for 2022 while reiterating the adjusted EBITDA outlook.
The Kraft Heinz Company Price, Consensus and EPS Surprise
The Kraft Heinz Company price-consensus-eps-surprise-chart | The Kraft Heinz Company Quote
Quarter in Detail
Kraft Heinz posted adjusted earnings of 70 cents a share, beating the Zacks Consensus Estimate of 67 cents. However, quarterly earnings declined 10.3% year over year mainly due to reduced adjusted EBITDA. The impact of divestitures and escalated taxes were a downside. The downside was somewhat offset by reduced interest costs and positive changes in other expenses/(income).
The company generated net sales of $6,554 million, down 0.9% year over year. Net sales included an adverse impact of 9.3 percentage points from divestitures net of acquisitions and an unfavorable currency impact of 1.7 percentage points. Net sales beat the Zacks Consensus Estimate of $6,387.7 million.
Organic net sales increased 10.1% year over year. KHC stated that pricing rose 12.4 percentage points year over year, reflecting growth in all segments. The upside can be attributed to measures undertaken to counter increasing input costs. Volume/mix fell 2.3 percentage points as strong demand across retail and foodservice channels was offset by supply constraints and elasticity impacts from pricing actions. Management noted that unfavorable volume/mix in the North America division more than offset favorable volume/mix across the International unit.
Gross profit of $1,984 million declined 13.4% from $2,291 million reported in the year-ago quarter. Adjusted EBITDA fell 10.9% to $1,520 million, reflecting the adverse impact of divestitures and unfavorable currency translation. Management highlighted that adjusted EBITDA reflected increased pricing and efficiency gains, offset by escalated commodity costs as well as supply chain costs and unfavorable volume/mix.
Segment Discussion
North America: Net sales of $5,039 million declined 3.1% year over year. During the quarter, pricing moved up 13.1 percentage points, but the volume/mix fell 3.3 percentage points.
International: Net sales of $1,515 million were up 7.2% year over year. Pricing moved up 10.3 percentage points and the volume/mix inched up 0.7 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $1,518 million, long-term debt of $19,724 million and total shareholders’ equity of $48,796 million. Net cash provided by operating activities was $788 million for the six months ended Jun 25, 2022. The company generated a free cash flow of $353 million during this time.
In a separate press release, Kraft Heinz declared a quarterly dividend of 40 cents per share payable on Sep 23, 2022, to shareholders of record as of Aug 26.
Image Source: Zacks Investment Research
Guidance
Kraft Heinz expects to deliver robust financial performance in 2022. Management raised its organic net sales view for 2022. Management expects organic net sales to be up high-single-digit percent compared with the year-ago period. Earlier, management had expected the metric to be up mid-single-digit percent. The revised outlook reflects solid to-date performance and continuing momentum in the business.
Adjusted EBITDA is expected to be in the $5.8-$6 billion range, with a 45% to 55% third and fourth quarter split. The view reflects the 53rd week in 2022, unfavorable currency impact, effects of divestitures and solid organic net sales. The view also reflects Kraft Heinz’s continuing efforts to manage inflationary pressures.
This Zacks Rank #3 (Hold) stock has increased 7.2% in the past six months against the industry’s 1.6% decline.
Some Better-Ranked Staple Stocks
Some better-ranked stocks are Lamb Weston (LW - Free Report) , Medifast (MED - Free Report) and General Mills, Inc. (GIS - Free Report) .
Lamb Weston, which produces, distributes and markets value-added frozen potato products, sports a Zacks Rank #1 (Strong Buy) at present. LW has a trailing four-quarter earnings surprise of 18.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LW’s current financial year sales suggests growth of 9.3% from the year-ago reported number.
Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2 (Buy). MED has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the corresponding year-ago reported figures.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2. GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of 2.2% and 1.5%, respectively, from the corresponding year-ago reported figures.