Kraft Heinz does not meet expectations

American Kraft Heinz failed to live up to analysts’ fourth quarter expectations, both when it comes to turnover and profit. It did manage a 900 % increase of its profit, but that did not convince any analyst.

Monster profit

The enormous profit growth was thanks to the altered American tax legislation. Turnover barely grew (+ 0.3 %) to 6.9 billion dollars (5.5 billion euro), but its like-for-like turnover actually dropped 0.6 %. Profit grew from 944 million dollar to an astonishing 8 billion dollars (6.4 billion euro), but that was because of a one-time income related to the American tax legislation reform.

The company is still doing rather well in Europe, with a 0.9 % like-for-like turnover increase, but there were drops in both Canada and the United States, down 8.6 % and 1.1 % respectively. The American drop is quite important, because it is also Kraft Heinz’ largest market, by far. In its home territory, it sold fewer nuts, less cheese and meat, among other things.

Did not reflect our potential”

“There is no question that our financial performance in 2017 did not reflect our progress or potential,” said Kraft Heinz CEO Bernardo Hees. “We made significant improvements in many of our businesses, and were able to accelerate some important business investments at the end of the year. This should help further advantage our brands and grow our business in 2018 and beyond.”

Analysts believe that Kraft Heinz will struggle to grow on its own and think it will need another important acquisition. The company already tried to do that when it bid for Unilever, but the Dutch-British company turned down the offer.