Kraft Heinz issues soft profit guidance after price increases boost revenue

Kraft Heinz on Wednesday beat Wall Street’s earnings and sales expectations, but offered soft profit guidance for the year, a sign of rising pressure from higher costs.

Shares of the Pittsburgh-based company, whose brands include Oscar Meyer, Philadelphia Cream Cheese and Lunchables, were little changed in premarket trading.

Here’s how the company did, compared to analysts’ estimates, according to Refinitiv:

• Revenue: $7.38 billion vs. $7.27 billion expected
• Adjusted earnings per share: 85 cents vs. 78 cents expected

Fourth quarter net sales rose 10% to $7.38 billion from year prior. The company swung to a profit in the period, too, reporting $887 million in net income, or 72 cents in earnings per share, versus a loss of $255 million, or 21 cents a share, a year earlier. Excluding items, per-share earnings for the most recent quarter were 85 cents.

However, the company expects adjusted earnings of $2.67 and $2.75 per share for the year, coming in below analyst estimates of $2.77 per share, according to Refinitiv.

Though packaged food companies have increased prices over the last two years, they still struggle with rising commodity costs and supply chain issues. Kraft Heinz boosted pricing 15.2% with a 4.8% decline in volume. The company cited price pressures and supply constraints in describing why volumes fell.

Despite beating on revenue and EPS, Kraft Heinz earnings contrast with companies such as Oreo maker Mondel?z International, which saw little demand pushback despite price increases.

The company expects organic net sales growth of 4% to 6% in 2023, slightly above estimates of 4.8%.

Kraft Heinz launched a campaign titled “LVII Meanz 57,” protesting the use of Roman numerals, ahead of Super Bowl 57. The brand launched a website where consumers could vote on whether or not Roman numerals should be dropped, according to a press release.