Kraft Heinz reports strong Q1 results with 4.6% sales rise
By Felicia Nwosu
Kraft Heinz, the processed foods giant, has reported an exceptional strong growth and profitability with net sales of $7.6 billion for the first quarter of 2023. This represents an increase of 4.6% compared to the same period last year. Similarly, the company’s organic net sales also increased by 6.1 percent. This is according to a report published on LinkedIn by “The Market Wake-Up Call”
Also, in another development, the company has pledged to step up marketing spend by double-digits this financial year, in order to grow its market share across its portfolio of brands.
The global leading company confirmed this performance as a testament to the company’s focus on productivity, cost savings, and innovation, noting that it also demonstrated the importance of core brands, particularly in a rapidly changing consumer landscape.
This was disclosed by Miguel Patricio, the CEO of the company, who stated that the company had delivered against its objectives a “strong” set of results, where sales increased 7.3 percent year-over-year to $6.49bn and profit grew by 9.4 percent to $2.11bn.
Patricio said the company was particularly pleased by its adjusted gross margin, which increased 126 basis points to 32.8%. This was driven largely by pricing, with volumes down 5.3% in the quarter.
According to Patricio, the company has upgraded its adjusted gross margins expectation for the full year, which it says will allow it to further reinvest in areas such as marketing and research and development.
“In the first quarter alone, we had 7.5 billion earned media impressions, an increase of 150 percent versus the first quarter of last year, and our total consumer engagement grew 24 percent across activations. The company indicated that its net income for the first quarter of 2023 was $1.1 billion, which is a significant increase from the $753 million reported in the same quarter of the previous year. The increase in net income was primarily driven by higher sales and lower expenses. The company’s adjusted earnings per share (EPS) of $0.95 also exceeded Wall Street’s expectations.
The record of its gross profit margin, showed an increased by 180 basis points to 40.6 percent, primarily due to higher pricing and productivity gains. The company’s operating income increased by 22.3 percent to $1.5 billion, primarily due to higher sales and lower expenses. The company’s operating margin increased by 190 basis points to 19.7%.
According to the company, various indicators were held responsible as catalyst and propellers which contributed to Kraft Heinz’s strong performance in the first quarter of 2023. One of the most significant factors was the company’s focus on its core brands, such as Kraft and Heinz, and its efforts to introduce new products that appeal to changing consumer tastes. The company’s organic net sales growth was primarily driven by its core brands, which accounted for 70% of its total net sales.
Another factor that contributed to the company’s performance was its focus on productivity and cost savings. Kraft Heinz has been implementing a multi-year productivity plan to reduce its costs and improve its operating margins. The company’s first-quarter results indicate that its efforts to increase productivity and reduce costs are paying off.
Patricio claimed the collaboration, which brings together two sets of brand expertise, is already “extremely successful” in the market. He also added that, above all, the quest to being “savvy” on promotions and discounting by utilising a data tool which allows it to determine the depth and timing of its promotional and discounting activity.
“The company has “significantly improved ROIs on promotional activity, executing fewer, better promotions”. In the US, it has reduced its volume sold on promotion by 12 percent versus the first quarter of 2019, and improved ROI by 15 percent.”
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