Kraft Heinz Co (NASDAQ:KHC) stock rose 3.25% (As on November 2, 11:52:46 AM UTC-4, Source: Google Finance) after the company reported a significant year-over-year increase in its third-quarter earnings for 2023, exceeding estimates. Growth was recorded in Foodservice, Emerging Markets, and U.S Retail sectors with organic sales rising by 1.7%, driven by a 7.1% price increase that compensated for a 5.4% volume/mix decline. Organic net sales saw a 1.7% YoY increase, with pricing rising 7.1 percentage points YoY. In North America, net sales saw a slight decline of 0.4% to $4,995 million due to a decrease in organic sales by 0.1%. In North America, ketchup, mayonnaise, Mexican sauces and frozen potatoes all increased in sales in the quarter. However, international net sales rose by 5.7% to $1,575 million with an increase in organic sales by 8%. The company ended the quarter with cash and cash equivalents of $1,052 million, long-term debt of $19,270 million, total shareholders’ equity of $49,434 million, and free cash flow of $1,841 million year-to-date. In the third quarter, Kraft Heinz hit a milestone in its transformation, reaching its target Net Leverage of approximately 3.0x. Year-to-date net cash provided by operating activities was $2.6 billion, up 72.8 percent versus the year-ago period.
KHC in the third quarter of FY 23 has reported the adjusted earnings per share of 72 cents, beating the analysts’ estimates for the adjusted earnings per share by 6 cents. The company had reported the adjusted revenue growth of 1 percent to $6.57 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue by $130 million.
Kraft Heinz has declared a quarterly dividend of 40 cents per share payable on December 29, 2023. The company has also raised its adjusted EPS and adjusted EBITDA guidance for the year while focusing on enhancing productivity and investing in marketing, technology, and research and development.
For 2023, management expects organic net sales growth at the lower end of its previously guided range of 4-6%. Adjusted EBITDA is expected to increase between 5-7% at constant currency compared with the earlier projection of a growth between 4-6%. The adjusted EPS for 2023 is now expected to be in the range of $2.91-$2.99, higher than the previous forecast of $2.83-$2.91. The adjusted gross profit margin is likely to increase 200-250 basis points in 2023 compared with the expansion of 150-200 basis points expected earlier.