Kraft’s volume/mix was hurt by the impact of Easter shipment, lower ready-to-drink beverage sales, and lower pricing in the cheese and food service businesses.
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Kraft reported net profits of $551 million or earnings of 0.92 per share, above analysts’ forecasts of 0.83.
Heinz reported a loss of 91 cents per share.
Meanwhile, Heinz’s sales for the quarter fell 4.1 percent to $2.62 billion from $2.73 billion in the prior year.
A joint venture that partners Warren Buffett’s Berkshire Hathaway with Brazilian private investment firm 3G Capital owns 51 percent of the combined company, while former Kraft shareholders hold 49 percent.
Kraft Heinz filed a Form 8-K with the U.S. Securities and Exchange Commission containing a detailed discussion of Kraft’s second quarter results as well as a Form 10-Q containing a detailed discussion of Heinz’s second quarter results. This Zacks Rank #4 (Sell) company is expected to save $1.5 billion in annual costs by the end of 2017 gaining from increased scale and possibly aggressive cost cuts. “We have a lot of hard work ahead of us as we continue to design our new organization”. RBC Capital started coverage on Kraft Heinz in a report on Tuesday, July 21st.
The Pittsburgh-based company makes Heinz ketchup, Oscar Mayer meats and Jell-O pudding.
While some senior level departures at Kraft were announced at the end of June (James Kehoe; Kim Rucker; Robert Gorski; Jane Hilk; Dave Ciesinski; Fred Paglia, and Chuck Davis) as Hees unveiled a new leadership team consisting primarily of Heinz executives, no formal announcements have been made since July 2. Sales for the quarter were $4.5 billion, down slightly from $4.7 billion in the same period a year ago. On a per-share basis after the payout of preferred dividends, the company reported a loss of US91c, compared with a loss of US14c a year earlier. In after hours, the stock dropped $1.31 or 1.66% at $77.50.
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Despite the downbeat Q2 results, investors have high hopes about the combination as 3G has proven it can successfully streamline companies under its control. The divesture of a frozen food business in the United Kingdom hurt sales by 0.6%.
