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The Kraft Heinz Co KHC

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With a Sharpened Focus, Kraft Heinz Poised to Hit the Bull's Eye With Its Refreshed Playbook

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

It’s been nearly two years since no-moat Kraft Heinz fell out of favor as past-management's decision to ratchet back brand spend in favor of short-term profit gains wreaked havoc on its competitive position (culminating in slumping sales and profits). But with the appointment of Miguel Patricio as CEO in mid-2019, we'd surmised the tide was beginning to turn, given his seeming appreciation for consumer-valued brand spend and a more surgical approach to removing excess costs. Although we posit it was embarking on a course to stabilize its foundation, the onset of the pandemic provided a timely spark. In this vein, through the first three quarters of fiscal-year 2020, Kraft Heinz boasted high-single-digit underlying sales gains (versus a 1.5% downdraft in the first nine months of fiscal 2019) and adjusted operating margins of 21.6% (up 120 basis points over the prior year).

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Company Profile

Business Description

In July 2015, Kraft merged with Heinz to create the third- largest food and beverage manufacturer in North America behind PepsiCo and Nestle and the fifth- largest player in the world. Beyond its namesake brands, the combined firm's portfolio includes Oscar Mayer, Planters, Ore-Ida, and Philadelphia. Outside North America, the firm's global reach includes a distribution network in Europe and emerging markets that drive around one fifth of its consolidated sales base, as its products are sold in more than 190 countries and territories around the world.

One PPG Place
Pittsburgh, PA, 15222
T +1 412 456-5700
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 28, 2020
Stock Type Slow Growth
Employees 37,000