Kraft Heinz, the packaged-food company behind brands like Jell-O and Heinz ketchup, reported sales fell 3 per cent in the first quarter, as snack food industry strives to adjust to more health-conscious consumers.
The company’s shares slid 3.2 per cent in extended trading after it reported adjusted earnings of 84 cents a share, falling short of analysts’ estimates of 86 cents a share. Sales slipped to $6.36bn, down from $6.57bn a year ago in the first three months of the year. Wall Street analysts had forecast sales of $6.45bn.
Organic net sales fell 2.7 percent versus the year-ago period, much steeper than the 0.7 per cent drop the market had forecast.
The company said the results reflected sluggish demand in North America – with sales in the US, its biggest market, down 3.5 per cent to $4.6bn while those in Canada dropped 12.2 per cent to $443m.
However, the company insisted that its cost savings strategy is helping to combat sliding revenues. “Although our top line results…reflect a slow start to the year, we remain on track with our key initiatives,” said chief executive Bernardo Hees.
Kraft Heinz –which came together in a $100bn deal devised by Warren Buffett and Brazil’s 3G Capital in 2015 — has been looking to become leaner to offset declining sales. It aims to cut costs by $1.7bn annually by 2018.
Kraft Heinz in February tried to buy Unilever for $143bn, but was rebuffed. Shares have grow more than 13 per cent in the past year.