Earnings Results: Kraft Heinz earnings show effects of recent price increases: ‘Food is proving to be very resilient’

by | Oct 26, 2022 | Stock Market

Kraft Heinz Co.’s results benefited from price increases in the latest quarter, but those results weren’t enough to satisfy Wall Street. Shares of Kraft Heinz
KHC,
-0.89%
were down about 1% midday Wednesday, even as the company easily topped earnings and revenue expectations while disclosing that its third-quarter prices were up by 15.4 percentage points from a year before.

“If you might remember, we have executed a new price increase in the month of August, and the elasticities turned out to be stronger than what is anticipated, which resulted in strong top line,” Global Chief Financial Officer Andre Maciel said on the company’s earnings call, according to a transcript from AlphaSense/Sentieo. He went on to say that even as the packaged-food giant has raised prices, it hasn’t observed a noticeable gap between its prices and those of private-label brands, “except to catch up on Lunchables.” Overall, “food is proving to be very resilient,” as are Kraft’s brands, he said. At the same time, the company is dealing with supply-chain issues. “You can see that the environment continues to be challenging,” Carlos Abrams-Rivera, the company’s president for North America, told investors on the earnings call, noting that Kraft has experienced “about 80% of those challenges … really due to upstream supply distribution on ingredients and certain packaging materials.” Bernstein analyst Alexia Howard highlighted that the company “seems to be navigating the ongoing supply chain disruptions fairly well,” since it showed positive growth in underlying earnings before interest, taxes, depreciation, and amortization (Ebitda) “despite intense input cost pressures.” Still, she sees a mixed outlook for next year. “ …

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