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Sticky at-home cooking behavior powers Kraft Heinz's upbeat quarter

Kraft Heinz beats sales estimates on higher snack, packaged meals demand
Kraft Heinz beats sales estimates on higher snack, packaged meals demand   -   Copyright  Thomson Reuters 2021
By Reuters

-Kraft Heinz Co topped market estimates for quarterly net sales and profit on Wednesday, as demand for snacks and packaged meals remained strong even as people started venturing out following the easing of coronavirus restrictions.

Packaged food makers were among the major beneficiaries of the pandemic-induced curbs in 2020 that forced people to cook more at home.

“We are seeing signs that several pandemic-inspired cooking and eating behaviors are sticking, even as mobility increases and restrictions lift,” Kraft senior executive Carlos Abrams-Rivera said.

Analysts anticipate the pandemic-led boom in sales to last as remote working trends stay largely in place, though growth could slow from the unprecedented levels seen during the height of the pandemic.

Companies across sectors, including packaged food, have been plagued by higher costs of ingredients such as resins, edible oils and coffee, while spending heavily on shipments to ease the strain on their supply chain due to the pandemic.

Chief Executive Officer Miguel Patricio, who flagged an uptick in cost pressures over the past three months, said the level of inflation was manageable.

“We have been and will continue to execute inflation-justified key commodity pricing,” Patricio added.

The Jell-O maker projects annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be above the $6.1 billion it recorded in 2019. Adjusted EBITDA for the first half was $3.29 billion.

The company forecast current-quarter organic sales to decline by low-single-digit percentage compared with last year when sales surged on panic buying amid pandemic restrictions.

However, it expects organic sales to grow by mid-single-digit percentage, compared with pre-pandemic levels two years ago.

In the second quarter ended June 26, net sales fell marginally from a year earlier to $6.62 billion, but topped estimates of $6.55 billion.

Excluding items, Kraft earned 78 cents per share, above estimates of 72 cents, according to IBES data from Refinitiv.