Boxes of Kraft Macaroni & Cheese.
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What a difference a year makes. Kraft Heinz is rising early Thursday, following the packaged-food maker’s fourth-quarter results and an agreement to sell its Planters brand, the latest update on its turnaround plan.
Kraft Heinz (ticker: KHC) said it earned $1 billion, or 84 cents a share, up from 15 cents in the year-ago period. On an adjusted basis, which excludes one-time items like restructuring and impairment charges, earnings were 80 cents a share. Revenue rose 6.2% year over year to $6.94 billion. Analysts were looking for EPS of 74 cents on revenue of $6.82 billion.
Organic sales climbed 6% in the quarter. Looking ahead, Kraft said it would see flat to positive organic-sales growth in the current first quarter.
In addition, Kraft announced that it is selling its nut business, which includes the Planters brand, along with Cheez Balls and Corn Nuts, to Hormel Foods (HRL) for $3.35 billion. The deal for the division, which contributed about $1.1 billion to Kraft’s sales in 2020, is expected to close in the first half of the year.
Kraft Heinz is up 6.1%, at $35.97, in recent trading. The shares have risen nearly 29% in the past year and are up 3.8% since the start of the year.
The sale of Planters and other nut products isn’t a surprise. The Wall Street Journal reported earlier this month that the two companies were nearing a deal. The sale is the latest in a string of asset divestitures for Kraft, as the company has been shedding noncore business as part of its turnaround.
That transformation has gotten a boost from the Covid-19 pandemic, which has benefited brand-name packaged-food companies, as consumers eat more meals at home and in many cases turn to trusted products over private-label ones. The latest quarter is evidence of how much progress Kraft has made, in contrast to the stock’s decline in the year-ago period.
Kraft has been working its way back from a bombshell earnings report in February 2019, which included a dividend cut and a $15.4 billion asset write-down tied to its Kraft and Oscar Mayer brands and led to new leadership and other drastic changes.
Write to Teresa Rivas at [email protected]
