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Kraft Falls On Margin Pressure From Pricier Ingredients

Stock Markets Aug 04, 2021 17:14
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© Reuters.

By Dhirendra Tripathi

Investing.com – Kraft stock (NASDAQ:KHC) fell 4% Wednesday as the company warned of pricier ingredients and other raw materials hurting its margins.  

At the same time, the maker of Philadelphia cream cheese and Heinz ketchup said it is “effectively managing inflationary pressures." The company is undertaking price hikes on its products to offset pressure on margins.

Traders ignored the company’s forecast of annual core earnings topping even the pre-pandemic levels.

For the ongoing quarter, Kraft expects a mid-single-digit percentage increase in organic net sales and a low-single-digit percentage decline in constant currency adjusted earnings before interest, taxes, depreciation and amortization compared to the third quarter of 2019.

The company’s second-quarter net sales and profits were both higher than expectations but lower than last year’s comparable figures.

Net sales fell 0.5% to $6.61 billion as at-home consumption moderated with people stepping out after a year of pandemic. Same time last year, people stayed home and stocked up on all groceries.

The company shutting down its nuts business in the second quarter also hurt sales. Otherwise, net sales were even higher than 2019-levels.

Adjusted earnings per share on a diluted basis fell to 78 cents from 80 cents of last year’s quarter.

Kraft Falls On Margin Pressure From Pricier Ingredients
 

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