The Kraft Heinz Company reported third-quarter 2024 net sales of $6.38 billion, a 2.8% decrease from the prior year, with organic net sales declining by 2.2%. This was primarily driven by a 3.4 percentage point unfavorable volume/mix, partially offset by 1.2 percentage points of positive pricing.
Operating income decreased significantly by 115.5% to a loss of $101 million, largely due to $1.4 billion in non-cash impairment losses, mainly related to the Lunchables brand and goodwill in Continental Europe. Diluted EPS was $(0.24), down 214.3%, while Adjusted EPS increased 4.2% to $0.75.
CEO Carlos Abrams-Rivera noted that Global Away From Home and Emerging Markets performed in line with expectations, but the U.S. Retail business is experiencing an 'elongated recovery' due to specific categories under pressure. The company narrowed its full-year 2024 outlook for organic net sales, adjusted operating income, and adjusted EPS to the lower end of previous expectations.
Management acknowledged that the recovery is taking longer than anticipated, with persistent consumer trade-down impacting U.S. Retail share. Despite these challenges, Kraft Heinz remains focused on profitable growth, strong cash flow generation, and disciplined investments in marketing, R&D, and technology.
The company is implementing its Brand Growth System for Lunchables, expanding flavors, reimagining value, and launching new campaigns to rebuild trust after negative publicity. An ingredient supplier issue is also creating a short-term shortage for one important Lunchables SKU, primarily impacting Q4 2024.
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