The FINANCIAL — The Kraft Heinz Company on February 25 reported fourth quarter and full year 2015 financial results that reflected strong gains in profitability from improved operations and the ongoing integration of Kraft and Heinz.
“The important integration work and financial results we delivered in 2015 set a solid base on which we can drive sustainable growth across our global business,” said Kraft Heinz CEO Bernardo Hees. “We are working to implement proven management methodologies, remove inefficient spending and streamline our organization, while investing in our brands and innovation to drive long-term profitable growth. We believe that all of this positions Kraft Heinz for a strong performance in 2016 and beyond.”
Pro forma net sales were $7.1 billion, down 5.0 percent versus the year-ago period, primarily driven by a negative 6.1 percentage point impact from currency and a negative 0.5 percentage point impact from divestitures that was partially offset by a 4.7 percentage point benefit from a 53rd week of shipments. Pro Forma Organic Net Sales decreased 3.1 percent versus the year-ago period. Net pricing increased 0.7 percentage points reflecting gains from pricing in all segments that were partially offset by a negative impact of approximately 1.5 percentage points related to lower overall key commodity costs in the United States and Canada. Volume/mix decreased 3.8 percentage points as strong growth in ketchup and sauces globally was more than offset by lower shipments in ready-to-drink beverages, frozen meals and coffee in the United States and Canada, according to Kraft Heinz.
Adjusted Pro Forma EBITDA increased 10.9 percent versus the year-ago period to $1.9 billion, despite a negative 9.4 percentage point impact from currency that was partially offset by a benefit of approximately 4.5 percentage points from a 53rd week of shipments. Excluding these factors, gains from cost savings initiatives and favorable pricing net of commodity costs were partially offset by unfavorable volume/mix.
Adjusted Pro Forma EPS increased 10.7 percent versus the year-ago period to $0.62 from $0.56, including an approximate $0.03 benefit from a 53rd week of shipments. This increase primarily reflected the growth in Adjusted Pro Forma EBITDA, partially offset by a higher tax rate compared to the prior year.
United States pro forma net sales were $5.1 billion, up 0.2 percent versus the year-ago period, including a 4.6 percentage point benefit from a 53rd week of shipments. Pro Forma Organic Net Sales decreased 4.4 percent. Net pricing increased 0.2 percentage points as higher net pricing across most categories was mostly offset by a negative impact of approximately 2.0 percentage points related to lower overall key commodity costs. Volume/mix decreased 4.6 percentage points due to lower shipments in ready-to-drink beverages and frozen meals. These factors were partially offset by favorable volume/mix from innovation in Lunchables as well as strong growth in condiments and sauces.
United States Segment Adjusted EBITDA increased 18.3 percent versus the year-ago period to $1.3 billion, including a benefit of approximately 4.5 percentage points from a 53rd week of shipments. Excluding this impact, gains from cost savings initiatives and favorable pricing net of commodity costs, primarily in dairy, were partially offset by unfavorable volume/mix.
Canada pro forma net sales were $632 million, down 16.1 percent versus the year-ago period, primarily due to a negative 15.4 percentage point impact from currency that was partially offset by a 4.1 percentage point benefit from a 53rd week of shipments. Pro Forma Organic Net Sales decreased 4.8 percent versus the year-ago period. Net pricing increased 2.3 percentage points. Significant pricing across most categories related to higher input costs in local currency were partially offset by approximately 2.0 percentage points related to lower overall key commodity costs, primarily in dairy. Volume/mix decreased 7.1 percentage points due to shipment timing and lower volumes in foodservice, Tassimo coffee and refreshment beverages.
Canada Segment Adjusted EBITDA decreased 7.2 percent versus the year-ago period to $167 million, primarily driven by a negative 16.6 percentage point impact from currency that was partially offset by a benefit of approximately 3.5 percentage points from a 53rd week of shipments. Excluding these factors, Adjusted EBITDA growth was driven by favorable pricing net of higher local input costs and gains from cost savings initiatives that were partially offset by unfavorable volume/mix.
Europe pro forma net sales were $640 million, down 14.4 percent versus the year-ago period, primarily due to a negative 7.8 percentage point impact from currency and a negative 4.2 percentage point impact from divestitures that were partially offset by a 3.5 percentage point benefit from a 53rd week of shipments. Pro Forma Organic Net Sales decreased 5.9 percent versus the year-ago period. Net pricing increased 0.4 percentage points driven by higher pricing in condiments and sauces in most markets. Volume/mix decreased 6.3 percentage points due to lower volumes in soup in the U.K., partially offset by growth in ketchup and other condiments.
Europe Segment Adjusted EBITDA increased 3.3 percent versus the year-ago period to $248 million, despite a negative 13.4 percentage point impact from currency that was partially offset by a benefit of approximately 4.0 percentage points from a 53rd week of shipments. Excluding these factors, gains from cost savings initiatives and improved product mix were partially offset by lower volumes.
Rest of World pro forma net sales were $770 million, down 16.6 percent versus the year-ago period, due to a negative 32.7 percentage point impact from currency, including a negative 14.9 percentage point impact from the devaluation of the Venezuelan bolivar in June 2015, that was partially offset by a 6.5 percentage point benefit from a 53rd week of shipments. Pro Forma Organic Net Sales increased 9.6 percent versus the year-ago period. Net pricing increased 3.2 percentage points, driven by significant pricing related to higher input costs in local currencies in RIMEA(5) and higher net pricing in sauces in Asia. Volume/mix increased 6.4 percentage points due to strong growth in sauces in Asia and ketchup across all geographies.
Rest of World Segment Adjusted EBITDA decreased 12.2 percent versus the year-ago period to $172 million primarily due to a negative 55.5 percentage point impact from currency, including a negative 34.0 percentage point impact from the devaluation of the Venezuelan bolivar in June 2015, that was partially offset by a benefit of approximately 6.0 percentage points from a 53rd week of shipments. Excluding these factors, Adjusted EBITDA growth was driven by favorable volume/mix and gains from cost savings initiatives.
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