Kraft Heinz bearish on outlook amid volume decreases ahead of split

Core Viewpoint - Kraft Heinz has revised its sales and profit outlook for the year downward, citing a decline in volumes in the third quarter, despite some growth in emerging markets [1][2]. Group 1: Sales and Profit Outlook - The forecast for Kraft Heinz's organic sales has been adjusted from a predicted drop of 1.5% to 3.5% to a decrease of 3% to 3.5% for the full year [2]. - Emerging-market sales grew by 3.8% in the third quarter, reaching $701 million, with organic growth at 4.7% [3]. - The company anticipates slower growth in emerging markets, particularly due to declines in Indonesia and pressures in the US retail sector [2]. Group 2: Financial Performance - Adjusted operating income in constant currency is now expected to fall by 10% to 12%, a revision from the previous outlook of a 5% to 10% decrease [5]. - The adjusted gross profit margin is projected to decline by approximately 100 basis points [5]. - In the third quarter, adjusted operating income decreased by 16.9% to $1.1 billion, attributed to inflationary pressures and increased costs [6]. Group 3: Future Projections - Adjusted EPS is now forecasted to be in the range of $2.50 to $2.57, down from the previous guidance of $2.51 to $2.67 [7]. - The effective tax rate on adjusted EPS is expected to be around 26%, reflecting a year-over-year headwind of approximately $0.23 [7].