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Kraft Heinz lifts Q3 2021 earnings on sales decline

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October 27, 2021

The Kraft Heinz Co. reported earnings gains on declining sales for the third quarter of 2021, which reflected growth in organic net sales on top of exceptionally strong growth in 2020, according to an earnings release.

"I am incredibly proud of our Kraft Heinz team for delivering another quarter of results that exceed our expectations, even as we face the ongoing challenges of the pandemic and now escalating inflation," Kraft Heinz CEO Miguel Patricio said in the press release. "We still have much to do, but our momentum is strong and our strategy to bring agility to our scale is working, which is why we are increasing full-year expectations."

Net sales decreased 1.8% from $6.44 billion in Q3, 2020 to $6.32 billion in the quarter ending Sept. 25, 2021, according to an earnings release.

However, net income rose 23.2% from $598 million to $736 million in the comparative quarters, while diluted earnings per share rose 20.4% from 49 cents to 59 cents and adjusted EPS fell 7.1% from 70 cents to 65 cents.

In addition, net sales versus the comparable 2019 period increased 4.1%, including a favorable 0.8% impact from currency and despite a negative 4.3% impact from divestitures.
Organic net sales increased 1.3% versus the prior year period and 7.6% versus the comparable 2019 period, with growth versus 2019 negatively impacted by 1.4% from exiting the McCafé licensing agreement.

Pricing was up 1.5% for the quarter versus the prior year period with growth across each reporting segment that primarily reflected inflation-justified price increases in foodservice and retail channels across all geographies. These gains came despite more normalized promotional activities with retailers versus the year-ago period, especially in the U.S.

The $6.32 billion in revenue beat analyst expectations by $240 million, while the non-GAAP EPS of 65 cents beat expectations by 7 cents and the GAAP EPS of 59 cents beat expectations by 3 cents, according to Seeking Alpha.

Shares traded at $36.18 today against a 52-week range of $29.21-$44.95.

Based on strong performance to date, the company expects organic net sales growth in 2021 to be flat compared to an exceptionally strong 2020 period.

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