The Kraft-Heinz Company
The Kraft-Heinz Company is an American multinational food company formed by the merger of Kraft Foods and Heinz.
It is the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world, with eight $1 billion+ brands.
The company was created in July 2015 through the merger of Kraft Foods Group Inc and H.J. Heinz Company.
Employees: 36,000 +
Revenue: $26.00 billion FY2022
HQ Location: Co-headquarters: Chicago, Illinois, and Pittsburgh, Pennsylvania
What they do:
They are a globally trusted producer of high-quality, great-tasting, and nutritious products for over 150 years.
The Kraft Heinz Company manufactures and markets food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products throughout the world.
Their products are high in quality, have a great taste, and are nutritional for all eating occasions whether at home, in restaurants, or on the go.
Their products are built around six consumer platforms
Net Sales by Consumer Platform FY21
Their vision and priorities:
Their Purpose: “Let’s Make Life Delicious”
To sustainably grow by delighting more consumers globally
They have a formula for driving relevance, efficiency, and results which include:
A new operating model with 5 primary elements 1) People with Purpose, 2) Consumer Platforms 3), Ops Center, 4) Partner Program, and 5)Fuel Our Growth
$2B in gross savings between 2020 and 2024 from efficiencies in Procurement, Manufacturing, and Logistics
Prioritizing high-return investments in growth, with a 30% planned increase in marketing and advertising spend
Using their scale to positively impact the world: 100% Heinz ketchup tomatoes should be sustainably sourced from “Seed to Bottle” by 2025
Things to know right now
One of the largest food and beverage companies in the world, Kraft Heinz goes far beyond mac and cheese or ketchup; it's home to some of their most beloved food brands, such as Planters, Philadelphia, and Oscar Meyer.
They have continued to find solutions to consumers’ needs this year:
Highlights from 2022:
They strengthened their portfolio to unleash the power of the GROW platforms.
Renovated their brands to apply their design-to-value framework to better serve the customers e.g. Lunchables contains contain LunchaBuild instructions to make for example; a racing car, a bear, a boat, etc from the biscuit, cheese, and ham contents.
Elevated disruptive marketing capabilities and earned response in the media e.g. the launch of Heinz Pasta sauce and their Heinz Vintage Drip advert
They have built strategic partnerships with Simplot, Ihop, Microsoft, and Google to drive, speed, qualities, and capabilities across the chain.
They have unlocked the value of acquisitions (Primal Kitchen, Just Spices, and Assan foods) in taste elevation and emerging markets to expand their footprint, capabilities, and channels
They created efficiencies that strengthened their balance sheet
Business units
Their operating results are reported through two reportable segments defined by geographic region: North America and International. (This was updated in 2022, prior to which Canada was reported separately to the US).
The business divisions operating in each of these segments are:
GROW Platforms
This business division trailblazes growth for the organization by building out capabilities such as creativity. They work with R&D to develop market technologies based on consumer insights as well as work with entrepreneurs to develop new businesses.
Food Service
Kraft Heinz's Foodservice business division provides a diverse portfolio of brands, marketing, and sales expertise, and resources to the food service industry.
Emerging Markets
This business division looks to invest in up-and-coming markets as a great opportunity for growth.
Their Competitors
Mondelez International
Nestle
Danone
Kerry Foods
Their financial calendar
Q1: January-March - Earnings 27th April 2023
Q2: April -June - Earnings 27th July 2023
Q3: July-September - Earnings 26th October 2023
Q4: October-December - Earnings 15th February 2024
Next Earnings Report:
Around 27th April 2023
Positives from the last earnings report Q4FY22:
Net sales increased by 10.0%, with Organic Net Sales growth of 10.4%
Net income increased by 447.9%.
Adjusted EBITDA increased by 8.6%.
Diluted EPS was $0.72, up 442.9%. Adjusted EPS was $0.85, up 7.6%.
Solid Momentum Across Each of Our Three Pillars of Growth
Strong Consumption with Holding Elasticities
Improved Market Share Trends
Foodservice Growth Outpacing the Industry
Strong Emerging Market Growth in the International Zone Driven by Go-To-Market Model
Risks to the business:
The continuously changing and uncertain COVID-19 pandemic, and government and consumer responses, could negatively impact their business and the results of operations.
They operate in a highly competitive industry. Their success depends on their ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation.
Changes in the retail landscape or the loss of key retail customers could adversely affect their financial performance.
Changes in their relationships with significant customers or suppliers, or in other business relationships, could adversely impact them.
Maintaining, extending, and expanding its reputation and brand image is essential to its business success.
They must leverage their brand value to compete against private-label products.
They may be unable to drive revenue growth in their key product categories or platforms, increase their market share, or add products that are in faster-growing and more profitable categories.
Product recalls or other product liability claims could materially and adversely affect them.
Climate change and legal or regulatory responses may have a long-term adverse impact on their business and the results of operations.
They may not successfully identify, complete, or realize the benefits of strategic acquisitions, alliances, divestitures, joint ventures, or other investments.
They may not be able to successfully execute their strategic initiatives.
Their international operations subject them to additional risks and costs and may cause their profitability to decline.
Their intellectual property rights are valuable, and any inability to protect them could reduce the value of their products and brands.
The Sponsors have substantial control over them and may have conflicts of interest with them in the future.
They may be unable to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, and improve competitiveness.
Their level of indebtedness, as well as their ability to comply with covenants under their debt instruments, could adversely affect their business and financial condition.
Additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets could negatively affect their financial condition and results of operations
Their net sales and net income may be exposed to foreign exchange rate fluctuations.
Commodity, energy, and other input prices are volatile and could negatively affect their consolidated operating results.
Volatility in the market value of all or a portion of the derivatives they use to manage exposures to fluctuations in commodity prices may cause volatility in their gross profit and net income.
Unanticipated business disruptions and natural events in the locations in which they or their customers, suppliers, distributors, or regulators operate could adversely affect their ability to provide products to their customers or their results of operations
Their performance may be adversely affected by economic and political conditions in the United States and in various other nations where they do business.
They rely on their management team and other key personnel and may be unable to hire or retain key personnel or a highly skilled and diverse global workforce.
They are significantly dependent on information technology, and they may be unable to protect their information systems against service interruption, misappropriation of data, or breaches of security.
Their results could be adversely impacted as a result of increased pension, labor, and people-related expenses.
Changes in tax laws and interpretations could adversely affect their business.
The volatility of capital markets or macroeconomic factors could adversely affect their business.
Financial Outlook for 2023
The Company expects 2023 Organic Net Sales growth of 4 to 6% this year
Constant Currency Adjusted EBITDA growth is expected to range between 2 to 4%
The Company anticipates high single-digit inflation for the year, with pricing and gross efficiencies contributing to Adjusted Gross Profit Margin recovery.
Adjusted Gross Profit Margin expansion is expected to fund incremental investments across technology, marketing, and people.
Adjusted EPS is expected to be $2.67 to $2.75, which includes approximately a $0.04 negative impact from expected unfavorable changes in non-cash pension and post-retirement benefits, and a $0.04 currency headwind at current foreign exchange rates.