Kraft Heinz sees Q1 profit boosted by Covid-19 stockpiling
The maker of tomato ketchup reported higher-than-expected quarterly earnings on Thursday due to consumers stockpiling its products amid the Covid-19 crisis.
Kraft Heinz recorded higher-than-expected first-quarter (Q1) earnings on Thursday, with the company putting the surge in sales and profits down to consumers stockpiling its products amid the Covid-19 crisis.
The maker of Heinz tomato ketchup and Kraft Macaroni & Cheese said that its Q1 sales hit $6.16 billion, slightly exceeding Wall Street analysts’ consensus estimate of $6.14 billion, according to IBES data compiled by Refinitiv.
Despite the rise in quarterly sales, Kraft Heinz noted that the lift in revenues was unlikely to translate into a stronger bottom line because of costs related to meeting the increase in demand.
The company said that around 7 percentage points of sales growth were the result of increased consumer demand related to the Covid-19 crisis, with shoppers stockpiling and panic buying due to government imposed lockdowns around the globe.
‘Our Q1 results reflect how strongly our employees have responded to the global Covid-19 challenge and the exceptional level of service our teams have demonstrated during this critical time; and for that, it is an incredible privilege to be part of the Kraft Heinz Company,' Kraft Heinz chief executive officer (CEO) Miguel Patricio said.
‘Going forward, we have a singular focus: to meet the demand for our products and ensure consumers have the food and nourishment they need during these uncertain times,’ he added.
2020 outlook remains uncertain, says Kraft Heinz
Looking ahead, the company forecast low to mid-single-digit organic net sales growth and mid-single-digit constant currency adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth for Q2.
The company admitted that its outlook reflected incremental demand from retail customers due to increased consumption amid government imposed lockdowns in developed markets and reduced foodservice channels globally.
‘The impact of the Covid-19 pandemic on the company’s FY 2020 results remains uncertain,’ the company said.
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