Kraft Heinz (KHC 71.49, -1.22) has given up 1.7% in pre-market after missing fourth quarter estimates.
The food company reported below-consensus fourth quarter earnings of $0.90 per share on a 0.3% year-over-year uptick in revenue to $6.88 billion, which was also shy of expectations.
Organic net sales declined 0.6% year-over-year even though pricing increased 1.0% due to increases in the United States and Rest of World. Volume/mix declined 1.6% due to lower shipments across categories like nuts, natural cheese, and cold cuts in the U.S. and cheese and coffee in Canada. The declines were partially offset by growth in macaroni and cheese in the U.S. and strong growth in condiments and sauces in Europe, China, and Indonesia.
Looking at the segment breakdown, net sales and organic sales in the United States declined 1.1% to $4.79 billion. Pricing increased 0.6% while volume/mix declined 1.7%. Segment adjusted EBITDA grew 1.4% to $1.52 billion thanks to cost savings initiatives, lower overhead costs, and higher pricing. The increase was partially offset by unfavorable key commodity costs, lower volume/mix, and higher investment.
Net sales in Canada declined 4.1% to $591 million while organic net sales fell 8.6%. Pricing was unchanged year-over-year while volume/mix fell 8.6% due to lower inventory levels at retail locations, the discontinuation of select cheese products, and lower shipments of coffee. Segment adjusted EBITDA rose 7.1% to $162 million due to favorable exchange rates and gains from cost savings.
Net sales in Europe rose 9.3% year-over-year to $656 million while organic net sales increased 0.9%. Pricing declined 0.9% due to changes in promotional spending levels in Italy, UK, and Russia. Volume/mix rose 1.8% due to growth in condiments and sauces in Germany, Spain, and France. Segment adjusted EBITDA rose 7.4% to $203 million, entirely due to favorable currency translations.
Rest of World net sales rose 5.2% to $843 million while organic net sales grew 7.0%. Pricing rose 5.7% due to actions taken to offset higher input costs in local currency. Volume/mix increased 1.3% as strong growth in China and Indonesia was offset by negative mix impacts in Australia and lower shipments in Brazil. Segment adjusted EBITDA declined 0.8% to $142 million due to unfavorable currency translations.
Kraft Heinz acknowledged that big food companies are facing pressure to consolidate, suggesting the company may be seeking an acquisition target.