(Reuters) - Kraft Heinz (NASDAQ:KHC) Co on Wednesday raised its forecast for annual organic sales growth after beating quarterly estimates, benefiting from higher product prices and sustained demand for its packaged meals and condiments.
Packaged food makers including Kraft Heinz and Campbell Soup Co are still seeing strong demand for their quick-fix meals, sauces and cooking essentials that boomed in popularity during lockdowns.
Kraft Heinz forecast mid-single-digit percentage organic revenue growth for the year, compared with its prior outlook for a low-single-digit percentage increase. But it stopped short of raising its core earnings forecast for 2022.
The Philadelphia Cream Cheese maker said it now expects full-year inflation to be in mid-teens percentage range, compared to prior expectation of low-teens percentage, also warning of further prices increases.
"Although we are seeing higher inflation than we initially expected, pricing and growth efficiencies are already offsetting the vast majority of that inflationary pressures," Kraft Heinz Chief Financial Officer Andre Maciel said in his prepared remarks.
Rival Mondelez International Inc (NASDAQ:MDLZ) on Tuesday trimmed its 2022 earnings growth outlook due to cost pressure, prompting J.P. Morgan analysts to say Kraft Heinz's decision to reiterate earnings forecast is "slightly positive."
"Expectations for food companies may have been lowered a small amount overnight," J.P. Morgan analyst Ken Goldman wrote in a note.
For Kraft Heinz, which raised product prices further in the first quarter, revenue fell 5.5% to $6.05 billion in the three months ended March 26 due to divestitures. However, it beat analysts' estimates of $5.83 billion, according to IBES data from Refinitiv.
Excluding items, it earned 60 cents per share, topping estimates of 53 cents.