(Reuters) -Kraft Heinz lowered its annual sales and profit forecasts on Wednesday, signaling persistent pushbank from budget-conscious consumers for pricier snacks and pantry condiments. Shares of the company, which said it would spin off into two, with one company focused on groceries and the other on sauces and spreads, were down about 2% in early […]
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Kraft Heinz trims annual sales, profit forecasts as demand remains stressed
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(Reuters) -Kraft Heinz lowered its annual sales and profit forecasts on Wednesday, signaling persistent pushbank from budget-conscious consumers for pricier snacks and pantry condiments.
Shares of the company, which said it would spin off into two, with one company focused on groceries and the other on sauces and spreads, were down about 2% in early trading.
Consumers, faced with high inflation and economic uncertainty, are increasingly switching to cheaper store brands, weighing on demand for Kraft and other packaged goods makers
Price hikes on some of its products, including coffee and meats, to offset higher costs have further dampened sentiment.
Kraft Heinz now expects 2025 organic net sales to fall 3% to 3.5%, compared with its prior target of a 1.5% to 3.5% decline, weighed down by weakness in markets including Indonesia and tepid demand from retailers in the U.S.
“The operating environment remains challenging,” Kraft CEO Carlos Abrams-Rivera said. “We see these pressures as persisting beyond the fourth quarter, leading to a longer path to consumer recovery.”
Kraft Heinz’s muted forecast is in line with other packaged food makers, including Mondelez, which tempered its full-year outlook on Tuesday, citing higher input costs and softer volumes.
Skippy peanut butter maker Hormel lowered its current-quarter profit forecast on Wednesday, due to the impact of inflationary pressures and operational disruptions.
(Kraft’s results and forecasts are) “incrementally negative, though perhaps not a big surprise,” brokerage J.P. Morgan said in a note.
The company forecast annual adjusted earnings per share of between $2.50 and $2.57, compared with its prior expectation of $2.51 to $2.67.
Kraft Heinz reported a net sales decline of 2.3% to $6.24 billion in the third quarter, compared with analysts’ estimate of $6.26 billion, according to data compiled by LSEG.
Net sales in its North America segment fell 3.8%, while overall prices for the company increased by 1 percentage point.
It reported adjusted quarterly earnings per share of 61 cents, compared to estimates of 58 cents.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Sriraj Kalluvila)