CHICAGO — Volume growth remains elusive for Kraft Heinz Co. For fiscal year 2024, volume/mix fell 3.5% with North America leading the way with a decline of 4.2%. Company-wide organic net sales fell 2.1% to $25.9 billion for the year.
Carlos Abrams-Rivera, chief executive officer, attributed the weak North America performance to four brands: Lunchables, Kraft Mayonnaise, Kraft Mac & Cheese and Capri Sun.
“Across each of these brands, we have kicked off the ‘brand growth system’ — running deep, forensic-like assessments that will uncover the most meaningful opportunities to drive brand superiority,” Abrams-Rivera said during a Feb. 12 conference call to discuss the company’s full-year and fourth-quarter results.
With Lunchables, the company is focused on expanding the brand into new occasions, improving the perception of quality and adding flavors that meet evolving consumer tastes.
“In our Mayonnaise business, we are strengthening our value proposition to re-engage with lapsed users and to attract new ones,” he said. “We are bringing new flavors, including pickle mayo, which had a successful rollout in the US. And we are taking this flavor expansion strategy globally, launching new flavors in countries including Canada, Australia, the UK and the Middle East.”
New flavors, pack sizes and partnerships are seen as key for Kraft Mac & Cheese to regain momentum while the company has renovated its Capri Sun brand with the launch of a 64-oz multi-serve bottle as well as single-serve bottles.
In response to a securities analyst’s question about why Kraft Heinz is underperforming in categories that are running close to historical growth rates, Abrams-Rivera continued to call out the four struggling brands.
“Our portfolio is about over 200 brands in over 40 countries,” he said. “If you think about today, where we see our challenges, they are concentrating in four brands and only in the US retail business.”
The Kraft Heinz Co.’s net income for the year ended Dec. 28 was $2.7 billion, equal to $2.26 per share on the common stock, and down 3.9% from the same period of the previous year when the company earned $2.9 billion, or $2.31 per share.
Annual sales were $25.8 billion, down 3% from the year before when sales were $26.6 billion.
The company’s operating income fell 63% to $1.7 billion from $4.6 billion the year before. The steep decline was attributable to impairment charges of approximately $3 billion the company took during the year. During the third quarter the company took a $1.4 billion impairment charge mostly against its Lunchables business and in the fourth quarter a charge was attributed to the company’s Oscar Mayer business.
Sales within the company’s North America business unit fell 2.9% to $19.5 billion from $20.1 billion the year before. Results for the company’s other, much smaller business units, were similar. The International Developed Markets unit had a sales decline of 2.4%, going to $3.5 billion from $3.6 billion the year before. Emerging Markets sales fell 4.3% to $2.8 billion from $2.9 billion.
For fiscal 2025, Kraft Heinz is guiding organic sales will be in a range of flat to down 2.5% versus fiscal 2024.
“This includes full year growth in our Emerging Markets and global away from home pillars, with an elongated recovery expected in US retail-challenged categories,” said Andre Maciel, global chief financial officer.
During the fourth quarter, Kraft Heinz earned $2.1 billion, or $1.76 per share, and a significant increase over the same period of the year before when the company earned $757 million, or 61¢ per share. The quarterly increase was mostly attributable to a $3 billion non-US deferred tax asset, according to the company.
Quarterly sales fell 4.1% to $6.6 billion from $6.9 billion the year before.