Kraft Heinz Sales in U.S. Decline, Teases Over Possible Deal

Kraft Heinz, which makes Heinz Ketchup and Kraft Macaroni & Cheese amongst other well-known brands, could acquire another large food company, and form a food giant in the processed food industry that would change the entire landscape of the industry.

Kraft-Heinz executives on Friday continued a delicate dance of making investors re-assured that they do not need a deal to increase revenue as well as profit over the long term, while saying as well that the company wants to be a consolidation force.

Since the merger in 2015 of H.J. Heinz and Kraft Food Group, the combined entity has cut more than $1.7 billion from its spending and has emerged as the leader in the industry for growing profit margins.

However, Kraft Heinz struggles when it comes to growing sales, in particular for its U.S. segment where it does its most business, mirroring the remainder of the packaged food industry.

Consumers are increasingly buying fresh food and upstart brands they consider healthier.

CEO of Kraft Heinz Bernardo Hees has emphasized that the company would be going through with investors; its manufacturing; sales; as well as distribution during the year in order to help jumpstart its sluggish sales.

Kraft Heinz posted sales in the U.S. of approximately $4.78 billion during its fourth quarter ending on December 30, and down from the same period one year ago of $4.83 billion, which represents a drop of 1.1% driven by weaker sales in cold cuts and nuts.

In all, the company posted sales of $6.9 billion during the quarter which represented an increase of just 0.3% from the same period one year ago, but below what Wall Street was expecting. Earnings for the company also came up short of expectations.

Kraft Heinz is backed by Berkshire Hathaway owned by Warren Buffett and controlled by 3G Capital the private equity company based in Brazil. 3G Capital has a strong reputation for acquiring businesses and squeezing their costs.

In 2017, Kraft Heinz bid of $143 billion to acquire Unilever was rejected, which left several investors anticipating the next major deal.

Earlier this week, Kraft Heinz posted a narrative slideshow of 90 minutes touting the ability of the company to transform the ingredients in old brands of the company like Macaroni & Cheese, while highlighting the fuzzier and warmer role Kraft Heinz plays such as it contributions to charities.

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