by Savyata Mishra
(Reuters) – Kraft Heinz cut its 2024 sales forecast on Wednesday due to weak demand for its snacks and processed foods, but maintained its target of adjusted profit growth of between 1% and 3%.
The group now forecasts net sales for the 2024 financial year in the range of -2 to 0%, whereas it had previously targeted organic growth of between 0 and 2%.
This caution seemed to satisfy investors, leading to a 4.8% rise in the share price on the Wall Street Stock Exchange around 3 p.m. GMT.
“We like KHC’s more cautious sales target and their recognition of the need to increase investment to drive volume,” said Andrew Lazar, an analyst at Barclays.
Food companies such as Kraft Heinz and Mondelez are facing weak demand due to price increases in key markets in North America and Europe since the start of the year.
Sales recovery is expected to be “more gradual” in the second half of the year, the company said.
Adjusted gross margin increased 210 basis points to 35.5% in the second quarter, driven by savings from the U.S. group’s investments in the supply chain and automation efforts.
That helped Kraft Heinz beat estimates with second-quarter adjusted profit of 78 cents a share, above analysts’ expectations of 74 cents.
Overall volumes declined by 3.4 percentage points during the quarter, while prices increased by 1.0 percentage point across the group’s portfolio.
Kraft Heinz, on the other hand, reported quarterly net sales of $6.48 billion, missing analysts’ estimates of $6.55 billion.
(Written by Savyata Mishra in Bangalore, Pauline Foret, edited by Kate Entringer)
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