Corporate Profiles - 2021 - 90

COMPANY OVERVIEW
Kraft Heinz Co.
M
iguel Patricio, chief executive officer of
the Kraft Heinz Co., expressed confidence
in the company meeting longterm
savings goals, even as inflationary input
costs looked likely to spread into 2022.
" We remain on track to deliver the $400
million of gross efficiencies we have planned
for this year and capture our five-year target of
$2 billion in savings that we have talked about
before, " he said Aug. 4 when the company reported
second-quarter results.
Kraft Heinz continued to expect inflation in
the range of mid-single-digit percentages for
the full fiscal year. Input costs for ingredients,
packaging and transportation all were increasing,
Mr. Patricio said. Kraft Heinz responded
with pricing actions and revenue management
levers, including price-pack architecture and
management of category price ladders.
Since COVID-19 elevated the number of
eating-at-home occasions in 2020, and in turn
Kraft Heinz sales, the company began comparing
2021 financial numbers to both 2020 and
2019 numbers. While net sales in the second
quarter ended June 26 were down 0.5% from
the same quarter of 2020, they were up 3.2%
when compared to the second quarter of 2019.
Several at-home cooking and eating behaviors
Pricing actions taken to counter rising input costs
appeared to be sticking around even as pandemic
restrictions eased throughout the summer,
said Carlos Abrams-Rivera, US Zone president,
on Aug. 4.
" Compared to 2019, nearly 2 million more
households bought Kraft Heinz brands in the
second quarter, boosting an already high household
penetration rate, while repeat rates were
up 8 percentage points, " he said. " Additionally,
spending per buyer, and per trip, both increased
by roughly 10% and 3%, respectively. "
Kraft Heinz in June reached an agreement
to acquire Assan Foods from Kibar Holding, a
privately held Turkish conglomerate. The deal
valued Assan Foods at about $100 million. Assan
Foods, a sauces-focused business, has been
a certified production partner for Kraft Heinz
since 2019.
" While this is a relatively small acquisition,
it serves as a steppingstone to accelerate our
retail and foodservice growth across Europe,
Middle East and Africa, " Mr. Patricio said.
The same month Kraft Heinz completed
the sale of its nuts business to Hormel Foods
Corp. in a cash transaction for $3.35 billion.
Kraft Heinz divested most products sold under
the Planters brand, including single variety
and mixed nuts, trail mix, Nut-rition products,
Cheez Balls, Cheez Curls and Corn Nuts branded
products.
Kraft Heinz dealt with a regulatory problem
in September. The US Securities and Exchange
Commission charged Kraft Heinz with " engaging
in a long-running expense management
scheme " resulting in the restatement of three
years of financial reporting. Kraft Heinz agreed
to pay a $62 million civil penalty but did not
admit or deny the SEC's findings.
The impact of the 59 transactions in the
procurement area did not affect the company's
adjusted EBITDA by more than 1% in any reporting
period, said Kathy Krenger, global chief
communications officer for Kraft Heinz.
" The internal control weaknesses we identified
and disclosed in 2019 were fully remediated
in 2020, " she said. " Kraft Heinz is
much stronger today because of the actions
we took and embedded into our company
culture. " CP
Chief executive officer -
Miguel Patricio
Kraft Heinz net income (loss)
($10,192)
$1,935
$356
$26,268
$24,977
$26,185
Kraft Heinz net sales
Kraft Heinz share price
per share
$25
$31
$37
$43
$49
2018
2019
2020
2018
2019
2020
Oct.
2020
Dec.
Feb.
2021
Apr.
June
Aug.
90 \ October 2021
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Corporate Profiles - 2021

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