Kraft Heinz Q3 Earnings Top, Organic Sales Hurt by Soft Volumes

Core Insights - The Kraft Heinz Company (KHC) reported third-quarter 2024 results with adjusted earnings of 75 cents per share, exceeding the Zacks Consensus Estimate of 74 cents, while net sales were $6,383 million, down 2.8% year over year and missing the consensus estimate of $6,407 million [3][4]. Sales Performance - Sales in key growth areas, Global Away From Home and Emerging Markets, met expectations, but the U.S. Retail division is expected to recover gradually due to ongoing pressures in certain categories [2]. - Organic net sales fell 2.2% year over year, with pricing up 1.2 percentage points, but volume/mix dropped 3.4 percentage points [4][5]. Financial Metrics - Adjusted gross profit was $2,189 million, with an adjusted gross margin of 34.3%, an increase of 30 basis points year over year [6]. - Adjusted operating income rose 1.4% to $1,330 million, driven by higher pricing and efficiency gains, despite challenges from volume/mix and manufacturing costs [7]. Segment Performance - North America: Net sales of $4,826 million, down 3.4% year over year, with organic sales declining 3.2% [8]. - International Developed Markets: Net sales of $882 million, down 0.2% year over year, with organic sales down 1.8% [8]. - Emerging Markets: Net sales of $675 million, down 2.4% year over year, but organic sales increased by 4.9% [9]. Cash Flow and Shareholder Returns - The company ended the quarter with cash and cash equivalents of $1,284 million and long-term debt of $19,383 million, with net cash provided by operating activities at $2.8 billion year-to-date [10]. - Kraft Heinz paid cash dividends of $1.5 billion and conducted share buybacks worth $538 million during the year-to-date period [11]. Future Outlook - For 2024, Kraft Heinz expects organic net sales growth to be at the lower end of the previous guidance range of 2% to flat year over year, with adjusted operating income growth also projected at the lower end of 1-3% [12]. - The adjusted EPS for 2024 is now anticipated to be in the lower end of the range of $3.01-$3.07, reflecting a growth of 1-3% [13].