The Kraft Heinz Company (KHC - Free Report) posted mixed third-quarter 2016 results wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Notably, the company’s shares were down 1.16% in afterhours trading on Nov 3, in response to the mixed performance.
Adjusted earnings per share of 83 cents surpassed the Zacks Consensus Estimate of 76 cents by 9.2%. Moreover, earnings surged 88.6% year over year on improved sales trends and growth in adjusted EBITDA.
Reported sales of $6.27 billion missed the Zacks Consensus Estimate of $6.31 billion by 0.7% but improved 2.4% year over year. However, pro-forma (adjusted) sales were down 1.5% owing to the negative impact of currency headwinds of 0.5% as a stronger dollar hurt the value of international sales.
Organically (excluding currency), sales dipped 1% because of lower volume/mix and pricing.
Volume/mix declined 0.3% in the quarter in comparison to a 2.1% rise in the previous quarter. The decline can be attributed to lower shipments across several categories, particularly cold cuts, foodservice and nuts in the U.S.
Pricing was also down 0.7% owing to deflation in meat and coffee in the U.S. and coffee in Canada; higher promotion mainly driven by timing of expenses in Europe, as well as stepping up of support for product launches across the globe.
Adjusted EBITDA rose 21.7% to $1.8 billion backed by cost savings from restructuring activities and pricing gains.
U.S.: Adjusted net sales of $4.39 billion declined 1.2% (reported and organic) year over year on lower volumes. Volume/mix decreased 0.7% in the quarter in comparison to a 3.1% decline in the last quarter.
Gains from innovation in Lunchables and coffee as well as macaroni & cheese were more than offset by declines in cold cuts, foodservice and nuts.
Pricing decreased 0.7% despite deflation in key commodities like meat and coffee.
Canada: Adjusted net sales of $550 million improved 2% year over year (reported and organic) on higher volume. Volume/mix grew 3.4% on the back of gains in foodservice as well as shipment timing in macaroni & cheese and coffee.
Pricing decreased 1.4% due to commodity-driven pricing actions in coffee.
Europe: Adjusted net sales of $513 million declined 14.5% year over year due to currency headwinds. Organically, sales fell 7.8% amid a challenging consumer and retail environment.
Volume/mix was down 4.9% owing to consumption weakness across several categories, primarily in the U.K. and the Netherlands. Also, the volume/mix compared unfavorably with the 0.1% increase in the previous quarter.
Pricing declined 2.9% due to increased promotional initiatives.
Rest of World: Adjusted net sales of $809 million improved 4.4% year over year. Organically, sales grew 3.6% on higher volume/mix and pricing. While pricing increased 1.9%, volume/mix rose 1.7%.
Kraft Heinz currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kellogg Company (K - Free Report) posted an earnings beat in the third quarter of 2016 on robust cost savings. Third-quarter adjusted earnings of 96 cents per share beat the Zacks Consensus Estimate of 87 cents by 10.3%.
Mondelez International, Inc. (MDLZ - Free Report) reported third-quarter 2016 results wherein earnings beat the Zacks Consensus Estimate while revenues missed the same. Third-quarter adjusted earnings of 52 cents per share beat the Zacks Consensus Estimate of 43 cents by 20.9%.
Upcoming Peer Release
Sysco Corporation (SYY - Free Report) is set to report first-quarter fiscal 2017 results before the opening bell on Nov 7. Last quarter, this global food products maker and distributor posted a positive earnings surprise of 6.67%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>