Demand for food and other basic items continued to surge at the end of 2021, even as prices climbed, and that trend boosted earnings for the Kraft Heinz Co. beyond Wall Street’s expectations in the fourth quarter of last year.
Headquartered in Pittsburgh and Chicago, Kraft Heinz reported its fourth-quarter earnings for 2021 on Wednesday. The company’s products include Heinz ketchup, Kraft mac and cheese, and Oscar Mayer hotdogs.
Its strong showing last quarter follows similar results for other major consumer staples producers such as Procter & Gamble and Coca-Cola. After adjusting for one-time accounting costs largely associated with the sale of a cheese business, Kraft Heinz said it earned 79 cents per share, exceeding Wall Street estimates. Including those costs, Kraft Heinz posted a net loss of $255 million for the quarter.
Revenue for 2021’s final three months slipped to $6.71 billion from $6.94 billion in the same period a year ago. But again, if one-time items are excluded, recurring revenue at Kraft Heinz’s existing operations rose 3.9% compared to the previous year and 9.4% relative to the comparable period in 2019, according to the company.
“Certainly the rise in at-home consumption during the pandemic has helped,” Carlos Abrams-Rivera, president of Kraft Heinz’s North America zone, said in remarks prepared for investors. The company also cited an increase in sales to food-service customers as more dining establishments reopened.
The packaged food maker has offset ongoing supply constraints that have roiled global markets by raising prices on its goods. On Wednesday, it reported that it increased prices by 3.8% last quarter. The company’s chief financial officer, Paulo Basilio, said the company will continue to make adjustments as appropriate.
On a call with analysts Wednesday, he said inflation in the fourth quarter of 2021 was higher than Kraft Heinz had expected. He predicted that the company will face inflation rates in the low-teens throughout 2022, with rates in the first half of the year outpacing those in the second half.
Abrams-Rivera noted that supply and production challenges stemming from COVID-19 caused his division to lose market share for some products. As the economy rebounds, businesses have struggled to keep up with surging consumer demand, and the cost of shipping, materials, and labor continues to surge.
“We need to do a better job anticipating demand and forecasting more accurately and, as a result, holding onto market share in parts of our portfolio,” Abrams-Rivera said Wednesday.
But he predicted the company will resolve such challenges within the year. And he said brands such as Heinz ketchup, Kraft Singles, Velveeta, Mio, and Capri Sun performed well during the fourth quarter.
Kraft Heinz CEO Miguel Patricio acknowledged that COVID-19 has been a major disruption.
“At the beginning, it was hard to adapt,” he told analysts Wednesday. “But I think that this is the new normal, and we are absolutely embracing the change of the [macroeconomic] pressures every day.”
Patricio said he was encouraged that the voluntary turnover rate among Kraft Heinz employees was lower in 2021 than in 2019. He called it “a rare accomplishment in today’s environment,” where U.S. workers continue to quit their jobs at near-record rates.
He also touted the affordability of Kraft Heinz products for consumers and the company’s growth in emerging markets overseas.
