Kraft Heinz lowered its annual sales and profit forecasts on Wednesday, signaling persistent weakness in demand for its pricier snacks and pantry condiments from budget-conscious consumers amid macroeconomic uncertainty.
Shares of the company, which has said it would split into two with one focused on groceries and the other on sauces and spreads, were down about one per cent in premarket trading.
Kraft Heinz now expects 2025 organic net sales to fall three per cent to 3.5 per cent, compared with its prior target of a decline between 1.5 per cent and 3.5 per cent, weighed down by weakness in markets including Indonesia and tepid demand from retailers in the U.S.
“The operating environment remains challenging,” Kraft CEO Carlos Abrams-Rivera said in a statement. “We see these pressures as persisting beyond the fourth quarter, leading to a longer path to consumer recovery.”
Cost-conscious consumers have switched to cheaper store brands due to high inflation and economic uncertainty.
Packaged foods peer Hormel Foods HRL.N also posted preliminary quarterly results below expectations on Wednesday, amid pressures on demand and impacts of inflationary pressures and operational disruptions.
Multiple prices hikes for some of its products, such as coffee and meats, to offset the higher costs of those commodities, also added to the demand woes.
The ketchup maker forecast annual adjusted earnings per share of between US$2.50 and $2.57, compared with its prior expectation of $2.51 to $2.67.
The company reported a net sales decline of 2.3 per cent to $6.24 billion in the third quarter ended Sept. 27, compared with analysts’ estimate of $6.26 billion, according to data compiled by LSEG.
Net sales in its North America segment fell 3.8 per cent, while overall prices for the company increased by one percentage point.
Excluding items, it reported quarterly earnings per share of 61 cents, compared with estimates of 58 cents.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Sriraj Kalluvila)
