The Kraft Heinz Company reported fourth quarter and full year 2017 financial results impacted by weaker demand for shipments for nuts, natural cheese and cold cuts in the US.
Net sales were $6.9bn, up 0.3% versus the year-ago period, including a 0.9 percentage point benefit from currency. Organic net sales decreased 0.6% versus the year-ago period. Pricing increased 1.0 percentage points, driven by price increases in Rest of World markets and the US.
Volume and mix decreased 1.6 percentage points, primarily due to lower shipments across several categories, particularly nuts, natural cheese and cold cuts in the US as well as cheese and coffee in Canada.
This was partially offset by ongoing growth in macaroni and cheese in the US as well as strong growth from condiments and sauces in Europe, China and Indonesia.
Net income attributable to common shareholders increased to $8.0bn and diluted EPS increased to $6.52, primarily reflecting benefits from US Tax Reform. Adjusted EBITDA increased 4.0% versus the year-ago period to $2.0bn, including a favourable 0.8 percentage point impact from currency.
US and Canada sales down
US net sales were $4.8bn, down 1.1% versus the year-ago period. Pricing increased 0.6 percentage points, reflecting higher pricing in cheese and seasonal items partially offset by distribution-related investments in cold cuts.
Canada net sales were $591m, down 4.1% versus the year-ago period, including a favourable 4.5 percentage point impact from currency. Organic net sales decreased 8.6 percent versus the year-ago period.
In contrast, Europe net sales were $656m, up 9.3% versus the year-ago period, including an 8.4 percentage point benefit from currency. Rest of World net sales were $843m, a 5.2% increase versus the year-ago period, despite a negative 1.8 percentage point impact from currency.
Bernardo Hees, CEO of Kraft Heinz, said: “There's no question that our financial performance in 2017 did not reflect our progress or potential. We made significant improvements in many of our businesses and were able to accelerate some important business investments at the end of the year. This, together with benefits from the US Tax Cuts and Jobs Act and additional investments in our capabilities, should help further advantage our brands and grow our business in 2018 and beyond.”
David Knopf, Kraft Heinz CFO, added “Since the HR-1 Tax Cuts and Jobs Act was signed into law, we have already taken actions and are accelerating key business initiatives. This includes approximately $300m in strategic investments to build our capabilities, our people skills and our brands; more than $800m in capital expenditures to improve quality, safety and capacity; as well as $1.3bn to pre-fund our post-retirement benefit plans.”