Kraft Heinz announced on Tuesday a reduction in its full-year sales and revenue projections, attributing it to declining consumer spending in the US and the repercussions of President Donald Trump’s Customs policies.
This marks another significant food company expressing concerns over trade tensions and sluggish consumer demand. Just last week, PepsiCo also adjusted its annual revenue outlook due to tariffs. Early Tuesday, Coca-Cola highlighted the downturn in US consumer spending amid economic uncertainty.
Kraft Heinz acknowledged its challenging situation, noting the need to keep prices low to prevent consumers from shifting to cheaper alternatives like its well-known ketchup, mayonnaise, and macaroni and cheese brands. However, tariffs affecting imported ingredients, such as coffee, are adding to costs.
“In terms of tariff pricing, we are doing everything we can to minimize the necessary price increases,” said Kraft Heinz Chief Financial Officer Andre Maciel during a conference call with investors.
Maciel mentioned that the company is exploring various options, including changing suppliers and restructuring products in the long term. Kraft Heinz has also stockpiled some inventory earlier this year to buffer against tariff impacts.
Based in Pittsburgh and Chicago, Kraft Heinz reported a 7% decline in North American revenue, down to $4.5 billion from January to March, with the US struggles overshadowing strong performance in Canada.
The company anticipates operating profit to grow by up to 10% this year, a revision from the previous projection of a decline of as much as 5%. They emphasized the need for flexibility to offer promotions and enhance marketing efforts, including the introduction of a new 11oz Kraft Mac & Cheese designed to serve a family significantly more than the original 7.25oz box.
Kraft Heinz also noted that adjustments might be necessary in response to federal regulations. Last week, US health officials urged food manufacturers to phase out artificial colors from the national food supply.
Kraft Heinz CEO Carlos Abrams-Rivera stated that Kraft Mac & Cheese has been free from artificial flavors and colors since 2016.
Kraft Heinz reported a 6% decrease in net revenue, dropping to $5.9 billion from January to March. Analysts polled by FactSet noted this was short of Wall Street’s expectations of $6 billion. The company now expects adjusted revenue to decline by 3.5% this year, an increase from the previous forecast of a 1.5% dip.
Kraft Heinz shares remained stable in trading on Tuesday afternoon.
Source: apnews.com