A strained provide chain has pushed up freight and labor bills and aggravated issues for corporations like Kraft Heinz.
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Kraft Heinz mentioned Wednesday it could elevate the costs of its snacks and condiments additional to counter hovering prices of uncooked supplies and transportation, after posting quarterly earnings above market expectations.
Shares of the Chicago-based firm rose as a lot as about 6% in morning buying and selling.
Packaged meals makers have been among the many largest pandemic winners final 12 months as stuck-at-home shoppers stockpiled on frozen meals, sauces and soups.
A strained provide chain, nevertheless, has pushed up freight and labor bills and aggravated issues for corporations like Kraft, Conagra and Kellogg which can be grappling with surging prices of grains, meat and edible oils.
“Kraft Heinz is doing a greater job of navigating rising prices and driving demand than we thought,” Edward Jones analyst John Boylan mentioned, including that the corporate has laid an excellent basis by decreasing prices and divesting sluggish companies.
Kraft, whose manufacturers embrace Philadelphia Cream Cheese and Heinz ketchup, mentioned it raised costs by 3.8 share factors within the fourth quarter when demand for its merchandise was additionally strong. Margins in 2021, because of this, have been increased than in pre-pandemic 2019.
The corporate expects inflation to be within the low-teens share vary for 2022, with increased ranges within the first half than within the second, mentioned Chief Monetary Officer Paulo Basilio.
Kraft additionally sees full-year natural gross sales rising by a low-single-digit share, in contrast with a 1.8% rise in 2021.
Its internet gross sales declined 3.3% to $6.71 billion within the fourth quarter ended Dec. 25, owing to some acquisitions and divestitures, however beat the Refinitiv IBES estimate of $6.61 billion.
Excluding gadgets, Kraft earned 79 cents per share, beating analysts’ common estimate of 63 cents.
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