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Kraft Heinz (KHC) Tops Q4 Earnings, Weak Sales Hit Stock

The Kraft Heinz CompanyKHC posted fourth-quarter 2016 results wherein earnings and revenues beat the Zacks Consensus Estimate.

Notably, the company's shares were down 2.40% in afterhours trading on Feb 15, in response to lower sales.

The company now expects annualized savings from its multi-year Integration Program to reach $1.7 billion by the end of 2017, up from a previous target of $1.5 billion.

Earnings

Adjusted earnings per share of 91 cents surpassed the Zacks Consensus Estimate of 87 cents by 4.6%. Moreover, earnings surged 46.8% year over year on higher volumes and lower costs.

Full-year earnings were $3.33 per share versus $2.19 a year ago, reflecting 52.1% growth. The reported figure beat the Zacks Consensus Estimate of $3.29 by 1.2%.

Sales

Reported sales of $6.857 billion beat the Zacks Consensus Estimate of $6.766 billion by 1.3% but declined 3.7% year over year. However, sales were down 3.7% owing to a 0.7% negative impact of currency headwinds and lower demand in the U.S. Additionally, an extra week in the year-ago quarter hurt results by 4.6%.

Organically (excluding currency), sales grew 1.6% on lower pricing in the quarter.

Volume/mix increased 1.7% in the quarter as against a 0.3% decline in the previous quarter. The improvement can be attributed to better results across the board.

Pricing was down 0.1% in the quarter as price increase to offset input cost inflation in Rest of World markets (mainly in Latin America) and gains in the U.S. were offset by the timing of promotional activities in Canada.

Full-year 2016 revenues were down 3.5% to $26.49 billion but above the Zacks Consensus Estimate of $26.38 billion by 0.4%.

Adjusted EBITDA rose 3.3% to $1.937 billion in the fourth quarter backed by cost savings from restructuring activities and pricing gains in the U.S.

Quarterly Segment Discussion

U.S.: Adjusted net sales of $4.84 billion declined 3.1% year over year. However, organic sales grew 1.7% on higher volumes and pricing. Volume/mix increased 1.4% in the quarter in comparison to a 0.7% decline in the last quarter. Pricing increased 0.3%.

Gains from growth in coffee as well as innovation in macaroni & cheese were more than offset by declines in cold nuts and foodservice.

Canada: Adjusted net sales of $617 million declined 2.4% year over year (reported) on higher volume. Organically, its sales improved 1.2%. Volume/mix grew 4.3%.

Pricing decreased 3.1% due to the timing of promotional activities.

Europe: Adjusted net sales of $600 million declined 13.3% year over year due to currency headwinds. Organically, sales fell 1.5% amid a challenging consumer and retail environment. Volume/mix was up 1% as growth in Russia was partly offset by lower shipments in the U.K.

Pricing declined 2.5% due to increased promotional initiatives in the U.K. along with higher investments in innovation of infant food.

Rest of World: Adjusted net sales of $801 million decreased 0.7% year over year. Organically, sales grew 4.5% on higher volume/mix. While pricing increased 2.8%, volume/mix rose 1.7%.

Kraft Heinz currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The Kraft Heinz Company Price, Consensus and EPS Surprise

The Kraft Heinz Company Price, Consensus and EPS Surprise | The Kraft Heinz Company Quote

Peer Releases

Mondelez International, Inc. MDLZ reported fourth-quarter 2016 results wherein earnings and revenues missed the Zacks Consensus Estimate. The underperformance was mainly due to a stronger dollar that impacted sales outside the U.S.

The Hershey Company's HSYfourth-quarter 2016 earnings beat the Zacks Consensus Estimate while sales missed the same. Earnings benefited from higher sales in North America. Hershey's fourth-quarter adjusted earnings per share of $1.17 also beat the year-ago profit of $1.08 by 8.3%.

J&J Snack Foods Corp. JJSF , a leading snack food provider, reported first-quarter fiscal 2017 earnings of 72 cents per share, surpassing the Zacks Consensus Estimate of 64 cents by 12.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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