Kraft Heinz's sales miss estimates as price increases hit demand. The company itself said this, announcing that it missed quarterly sales estimates as inflation-hit customers bought fewer packaged meals and condiments, discouraged by rising product prices.
Net sales rose to $6.72 billion in the quarter, up from $6.55 billion a year earlier: analysts had expected an average of $6.81 billion. The market did not like it, and the stock on Wall Street fell 0.5% in pre-market trading after maintaining annual sales and profit forecasts. In early trading, on the Nasdaq in New York, the stock left losing 1.3% immediately and then 1,9%.

In the second quarter ended July 1, net sales increased 2.6% to $6.7 billion, ebitda increased 337 basis points to 33.6% net income increased 277 percent to $998 million. Free cash flow is at $1.1 billion, up 205.8% from the previous year. In the first six months of this year,net income increased 75.4% to over $1.8 billion, sales increased 4.9% to $13.2 billion.
Also in the second quarter, Kraft Heinz's product prices increased by 11 percentage points, leading to a 7% drop in volumes. In the previous quarter, volumes were down 5.3 percentage points year-on-year.

The company also reported an increase in promotions in the market as customers went in search of cheaper alternatives for its ready-to-eat meals and snacks, sauces and kitchen essentials.

"In the U.S., the price gap has widened with respect to both private label and store brand competition -Kraft points out-. We have seen the branded competition increase promotion levels, while we have remained more disciplined".

The multinational company, maker of, among other things, Philadelphia cream cheese, reported adjusted earnings of 79% per share for the quarter, above analysts' estimates of 76 cents per share. However, the company reiterated its goals for 2023: organic sales growth of 4% to 6% and adjusted earnings of $2.83 to $2.91 per share.

U.S. packaged food manufacturers have kept their product prices higher for more than two years to protect their margins from soaring labor, raw material and transportation costs, but the benefits are beginning to fade as consumers become increasingly price conscious.

"We achieved excellent results in the second quarter, with increased net sales, profits and profitability. This is consistent with our strategy to accelerate profitable growth -explains Miguel Patricio, ceo and chairman of the board of Kraft Heinz-. We grew in each of our three pillars: foodservice, emerging markets and U.S. retail growth platforms".

"Although we faced headwinds in the second quarter, particularly with regard to market share performance in the United States -Patricio added-, the action plans we set out in the first quarter led to an improvement in the share trend each month. We expect these action plans to provide momentum for the second half of the year. Overall, our results give me confidence in the direction we are heading. As a result, we reiterate our forecast for the full year".