Daily Management Review

Kraft Heinz sets to cut costs by $ 2B in five years


Kraft Heinz, one of the world's largest food manufacturers, plans to cut costs by $ 2 billion over the next five years, CEO Miguel Patricio told The Wall Street Journal.

The funds saved will be used to stimulate sales of some brands. Marketing spending in general will increase by 30%.

"In the past, we've made decisions that were too short-term," Patricio said. "We're changing the mindset."

Kraft Heinz also told investors on Tuesday that it expects sales to grow organically by 1-2% over the long term, and adjusted earnings per share by 4-6%, Bloomberg reports.

Demand for several Kraft Heinz products, including Oscar Mayer deli meats and Kraft pasta, rose during the pandemic, WSJ notes. As a result, the company's sales growth over the past six months was higher than in recent years.

However, in some segments, Kraft Heinz's share declined. Analysts point out that some consumers are switching to cheaper brands.

In the second quarter of this year, Kraft Heinz recorded write-offs of $ 2.9 billion, as a result of which the company received a net loss.

Patricio had previously warned that some brands can no longer generate the same profits as in the past. At the same time, according to him, the company will not have to sacrifice profit for the sake of sales growth.

Following the creation of Kraft Heinz in 2015 through the merger of H.J. Heinz Co. and Kraft Foods Group Inc., the company's management spent several years to reduce annual costs by $ 1.7 billion through staff reductions, lower administrative costs and other measures.

source: wsj.com