|Bernardo Hees, CEO of Kraft Heinz|
“We had a slow start, some missteps along the way, and took some decisions to accelerate investment in Q4 that held back 2017 financial performance,” Hees said during a Feb. 16 earnings call.
Net income attributable to common shareholders of the Kraft Heinz Co. in the year ended Dec. 30, 2017, was $10,999 million, equal to $9.03 per share on the common stock, up sharply from $3,452 million, or $2.84 per share, in the year prior. Net sales for the year declined to $26,232 million from $26,487 million.
For the fourth quarter, net income attributable to common shareholders of the Kraft Heinz Co. was $8,003 million, equal to $6.57 per share, up from $944 million, or $0.78, in the year-ago period. Net sales of $6,877 million were up 0.3 percent from prior-year sales of $6,857 million. Organic net sales declined 0.6 percent.
“Two is faster actions to achieve the right balance between pricing and key commodity costs, particular in a few of our larger US categories, as well as our Brazilian vegetable business during the year.
“Three is moving quickly and making the necessary adjustments when executing critical category and brand turnarounds...
“The other factor that held back our 2017 financial results were decisions we took during the fourth quarter where the HR-1 Tax Cuts and Jobs Act was in process. This new law provides us with additional cash and incentives to accelerate investments to grow our business.”
Increased investments in marketing, in-store sales teams, e-commerce and supply chain dampened fourth-quarter EBITDA in the United States, Hees said.
Net sales in the company’s US business fell 1.1 percent to $4,787 million in the fourth quarter, reflecting volume declines in Planters nuts, natural cheese and cold cuts.
|David Knopf, CFO of Kraft Heinz|
“By segment the United States was more or less consistent with our expectations, although we made a decision to invest to protect distribution in cold cuts, and that held back the contribution from pricing in Q4,” said David Knopf, CFO. “In Canada, while we expected year-end 2017 retail inventories to be lower than 2016, they came in even lower than our initial expectations and look to be permanent. So, this will likely translate into some headwinds moving forward.
“Europe was consistent with expectations, benefiting from gains in the UK and strong growth in Southeast and Central Europe where we are now selling the Kraft brand. And in Rest of World the accelerated growth we expected in Asia from China and Indonesia was held back by more prolonged slowdown than expected in Brazilian canned vegetables.”