KHC - Earnings call transcript Q1 2021 | The Kraft Heinz Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to The Kraft Heinz Company First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Global for of Company. Kraft Head Jakubik, Investor The Relations Heinz Chris go sir. Please ahead,

Christopher Jakubik

and is and Thank of everyone. first hello you This update. business Relations Q&A for Kraft quarter our XXXX Global Chris at Heinz to Company, welcome session our Investor Head Jakubik,

our you our risks results Actual in we SEC. filings are may due to remarks As uncertainties our will statements and forward-looking discussed today. some know, see release based are things during and with these that on today, and make press how we differ the

the during discuss call should our within We non-GAAP replacement read you will also GAAP some release. considered earnings find GAAP be these financial for measures to measures financial non-GAAP with today should be And together the reconciliations non-GAAP and a and results. not can

begin, we for Patricio few Before over it going hand CEO, I'm to remarks. Miguel our quick Miguel? opening a to

Miguel Patricio

I today overall to thank wanted start you Well, discussion Chris. thoughts. our Yeah. few just a with

we even have bottom line supply First, result. able and to constraints. household encouraging platforms in very strongest growth with under-developed the our and and inflation begin gains a to topline had priority of managing were countries very that penetration and strong especially both with as in year, a markets We very, markets, open hold start effectively

we creative on be different in that we efficiency We of capacity for At We it's same we our platforms. And our and are period 'XX. said single-digit retail unlocking strategic in marketing, early the - and we to full bringing in continue manageable expecting time, like Energize areas million about also QX and ahead plans, financials see tracking mid feel QX. and $XXX in efficiencies versus growth advantage very growth business encouraged our inflation could stronger in more beginning by more year. That our Grow initiatives should but the too progress are XXXX with to also to foodservice change still gains accelerate the same be in in in in the XXXX be joint year. plan the that to expect outlook agile

building. we financial Finally, we are additional with flexibility that are pleased

and track increased We will to are the continue our hand to and divestures start further debt it flexibility. now the on reduce aggressively operator I we can to Q&A. back

Operator

comes you. question from Andrew the of with Thank Barclays. Lazar Instructions] Your [Operator line first

Andrew Lazar

mobility forward. maybe of further and Thank saw I XXXX. this comment quarter? could and Miguel, going does that you're Thank I strength even primarily the you trying But than briefly guidance assume thinking market then through about what sales reopening was organic know that a, also get for and trends expecting. XQ than I'm hoping sense how And you. of, in sort a stronger was the And we durability is probably bit sales emerging you prudent see the better thought to of quite versus a notable to XQ growth consensus represent you is it bit this was for trying a deceleration just, being is a sequential be you. means Rafael I what just - maybe

Miguel Patricio

the Hi, you Andrew. question. Thank for

so will the the have quarter market going and mix mix. of sure we in different because one opening a and second the in mind that keep of are will of Foodservice the for fading reasons. is change Now that to stronger with be COVID

passing that not 'XX want 'XX to that let's reason to in numbers remember if The has that a numbers the Rafael? and of you don't is the was before question in know strong impact. and second that McCafe complement also that I of Paulo,

Paulo Basilio

highlight I'll the you. right thank Miguel, points.

always X.X prior the impact We of growth digit low points. single versus is down and year McCafe are calling percentage

as although that are in deceleration the So you going quarter. is we're it's mix of there the that to developed dramatic we saying some and reopening impacts markets seeing are that feel the of not

Miguel Patricio

But of please? that quarter strong sales said, first with yes, terms net mentioned was Rafael, 'XX. compared when you a quarter very as in

Rafael Oliveira

strategy, the Yes. mean mean expansion been for up has with during would remain go-to-market the for factors mean right, I two focus. our But localized I consistent quite us combined - model. has factors helped of centered very on that results, has us I point also emerging it been the during Andrew. There right, gaining been I during and the last pandemic, pandemic, this well. these focused two in platform, — performing the availability. see pandemic. around proven say reasons. like held And the Elevation three Thanks emerging focus, share. Thanks. can Taste and customer added on servicing question. are consumption a We is quarters XQ quite across a right, is We've international Hi, second the whole you our row. during share One and the well also the markets market relatively

we So discussed and the initiatives CAGNY. we momentum during this the continue based throughout to on do strong move expect as year we that

Andrew Lazar

much. Great. very Thanks

Operator

question next of line the Credit Robert comes from Moskow Your with Suisse.

Robert Moskow

as to wondering Thanks some of kids you to school. retail peers question. the back maybe going was for look more exposed at Hi. your your I if mix U.S. than

make itself - full more way? Thanks. headwinds brands the up time does of Singles, back think lunches you have of, Cheese does kind along they're lot you or normal going to these that and Oscar You than is kids it have home. When Kraft somehow their a at Mac for somewhere they're schooling, Meats will Lunch when do for that's parents it Mayer face there, guess, I - and making it

Miguel Patricio

actually increasing all, actually we hot Plus the the are coming first and even Mac consistent. we're across feel household those seeing more whether mean, think penetration. Oscar have box, that's of I Those if different we day-parts you good whether Mayer made about gains think months. the very Listen, kids on use if also consumption you gains younger - like thank a are question. happening that controlling controllables. even that the typically about last for the about those over diverse Well, we're it's and that's from six brands dogs, you and school seeing lunch and in at Cheese, families families

So will would continue moving say continue do our that what new circumstances those we'll households is the I focus working the on it of things Thanks. to regardless forward. to and retain is be

Robert Moskow

thanks. Okay,

Operator

line of the next Bryan question Spillane from Your America. comes with of Bank

Bryan Spillane

I've inflation. related got two to questions

that just savings just and gross the The there breakdown get the can between if is or give of if an first think to us of understanding gross inflation net guidance you cost is versus not, net one, inflation? mid I And inflation. is single-digit wanted cost inflation for a that

Miguel Patricio

question. the for Bryan thanks

we it supply all be see our currently like peers, believe our are So, Actually we management low that number the of And manageable view. would also is growth, of as highlighted when - our seeing mid that happening call as still we provided as so that the today end as a our will saw $XXX but guidance the single-digit mid-single for seeing And be percentage we in it's company. our million efficiencies mentioned the that this and total that in cost in the inflation, when in we last okay? gross we this escalation the we mentioned have COGS the that's range digit many we levers chain. around efficiencies final inflation that we for we we add, since of revenue before,

Bryan Spillane

on markets, terms you'll just if also of have but Okay. just markets work I of in follow-up in perspective than — for through So Europe us Rafael, especially just give that we'll in developing America? managing different bit the you then guess Thank way you could inflation of a in tools terms you. what is in what in see I could available, terms you inflation? North of in it And your inflation, little

Rafael Oliveira

we've Hi, because pricing Bryan. markets, Yes, what achieve you we pricing key premiumization partners Germany In behind tell closed France, so needed. In mean, already better, that Yes. all are I brands successfully is economies. right, local the normal can of with especially mean and on negotiations two. the countries inflations I is the let like more emerging and me break and down general look, to I developed in remain in key acceptance retail our the markets, we

in terms differences, So not in major we quite mean, US, overall, us of ingredients, said feel packaging, North in have North you America contributor against different international. in a comparing like is costs but to the right, I that. inflation and to the comparison, to similar America, I about confident logistics there moved are in similar mean

single-digit said range is what in numbers with of to terms total. in comparable the mid for what So Paulo line

Bryan Spillane

Okay, thank you.

Operator

with Jefferies. Dickerson line next question comes from Your of Rob the

Rob Dickerson

marketing Great, Miguel, vis-a-vis just around innovation thank your plans you of so a SKU right. much. rationalization, had kind I question plans,

for So been also as all to kind speak which SKUs, lot velocity scale, time. maximize of you right, we those of benefits to and over core on heard for a to has year, essentially there just a optimization the the right, of the focus retailers

of velocity of you portfolio pieces still come you So innovation, new of on comes are foresee sizable [ph] creative but I'm around focused those kind those look the there core forward kind just tails Thanks. the such off, curious of that development high that on innovation as the kind rationalizing that in, of items?

Miguel Patricio

this as with I ask my to factories on a complement this exactly and costs. - and seen we Carlos focus answer to see me to and standpoint supply in Let - and great opportunity from higher improve question rotation a our also also We on to a efficiencies is thoughts. your for us great have SKUs

this a want in comment numbers on So precisely of us? to of Carlos, for we going move what's positive. see you do more terms very as

Carlos Abrams-Rivera

say would done Difficulty]. it What is Miguel. we lot have [Technical Sure a of I -

been into if as reduced go [ph] to partners. with our retail go XX% what we this of our versus had we 'XX. — think I we this duration So And year, SKUs done probably has you have in

focus we're So actually of service core with we - and better better drive to to together our and transparency building that sure velocity of customers. impact, on us to have but kind trust our make allows level

good in we have So area. overall, Thanks. this and about we feel the are made I where progress

Operator

of Your next question Howard comes from with the line Alexia Bernstein.

Alexia Howard

okay? Can you hear everyone. morning, me Good

Miguel Patricio

Yes.

Alexia Howard

Perfect.

the here. wanted from path to ask I about promotional So

that pass more last mean and think Does couple we're what mean given year-on-year I QX. pulling prepared And I'll it promotion remarks the on does January back happened pricing of likely the see that talked, on. next pullback and promotions that Thank that elevated to You for net a quarters? during about the you year? level over in February in of

Carlos Abrams-Rivera

can I start.

about overall our how fits through that how good tell we're and I it in you Let terms me the inflation at view a to we our least of pricing can as ability and thinking first perspective and is, we all do of need our to promotions. pass give of cost to see I about you it. our about feel where

Miguel Patricio

lost We Carlos.

just pick up So let that. me on

froze a Carlos think little bit, Alexia. I out

back, but He - we're what of froze to the in see we I So the build think marketplace what on Carlos was sorry, sort start out is going where the were QX come going why we're unfolding able and on, there. seeing of don't going to you terms in ahead. Carlos is we at further in go

Carlos Abrams-Rivera

Sorry, my can now? hear me you apologies. Hopefully okay

Alexia Howard

Sounds great.

Carlos Abrams-Rivera

this we're still Listen, that is the Okay. working world new through.

quarters, of a appreciate I looking to pricing sales. the, of the think is at our positive if people actually was as you net pricing our eight about — I getting context the seven in know to drive do at the actually last that What within were So able our contribution we're that we quarters, patience.

brands we So are power. pricing iconic that showing actually are seeing our the

we window. look you when going Now, will promotional return supporting key forward, to

up you be for same initiatives drive are we share making Day, coming the time, this management it and renovate growth improve think will kind show continue the improve those And our media returns. we to of to summarize of value sit I consumers approach. how content implement to back strengthened drive impressions. up portfolio I creative that sure At One, if to marketing Memorial sure that and we is we're the if our our think of making try So in about and going moments. I we revenue the that we to three-prong thinking our we and also way diversifying through that this, the better

positive I our said, about have in for inflation sure we ability deal is this way the we that feel company. a So making do and with that to all the good

Alexia Howard

Great. Thank much. very on. it you I'll pass

Operator

from comes the question next with Jason Goldman of line Your English Sachs.

Jason English

in positive pricing, of you to you morning, expect the in. Good sliding to net Hey. U.S. on be question, do finer Alexia's Thank folks. back put for half the me everything of year? the a point in

Paulo Basilio

practice, But as pricing. do seeing are not as - forecast of we're we're against But unusual have half that us going management, mentioned, second again, Listen, savings. through to a we we the comparisons to in - the revenue some we as going and to of up Jason. Hi, see matter in levers manage inflation be lot back Carlos we a for half. through

our to inflation So we're feeling about this impact. good where profitability pretty manage from coming - very how that's

Jason English

million a of us mid think. let's flip X% help net low end cost to comfort mean, you saves, side. cost like singles Maybe inflation, get more of - I I said on that plus of to know sort little $XXX the to that's sort a I

some the to year? of if that that, of substantially the to costs, is me. but guessing above going You please what look the does off back base your as on the through rate we exit like these given can be And I'm tell wrong move go in I'm that. year half this correct cadence me I'm if on

Paulo Basilio

our ramp a that, as of the And exactly have progresses. of also year top revenue we here, base. progression would management But our how on quarterly we should give We going a up ramp of the so that's of going also progresses. - about not base, up gross think initiatives as the sales our initiatives our have again, cost year on I'm our have inflation you number to but levels

Jason English

Okay, thank you.

Paulo Basilio

welcome. You're

Operator

JPMorgan. of Your Ken with comes next from question the line Goldman

Ken Goldman

to the I guess, to here. and meat in. inflation there's months many talking buy it just single-digit spikes and putting materials I'm fair for we're about the is Hi. just you in coffee build beating of in to but a cheese of Thank rise wanted sense historically items on - horse mid a to are items start your in inflation advance higher some safe get a has think to that lot how way, if in know Kraft harder you. another year? in time. to on assume trying I locked big debt - are these unless I'm items going are bit the ahead is fairly like that I raw rest locked it at

a get guidance risk up to wanted to the just mid - I sense down inflation. the of So or of that either single-digit

Paulo Basilio

okay? X X very again, you're bellies are high And we in in that year a QX price the Ken. in a low of going have Big full inflation, have are Big for our to comp slight be overall, our lapping of pork inflation. We we Big just Hi, X key to specifically a This this we varies. seeing are But our seeing a — commodities heaviest cheese going year, terms the price in year. last in slight

by we how manage hedge, type In it terms of varies of and areas.

overall some But of So as the start tell we the scenarios lot we're are of is we overall is range volatility single-digit in — six where when other months, commodities said, course when are range. as we these seeing. go can what lot. we overall But beyond that I the are of there And COGS the is there percent what commodities as see are there mid a a in today this longer, shorter, of of that low-end again, seeing this months, a varies but I nine see markets.

Ken Goldman

telling now. for in created of valid I'm experts and of meat market corn you bit your is the are some what supply guess follow-up, prices and demand? little quick there given we're by these a I seeing Very right traders is about froth asking soybeans how and

Paulo Basilio

in of forecast. Ken like enter not type I this would to

for business profile on to specific of if plan different and We levels more we manage business the focused our sure allow that our provide hedging price that we to cost be are itself. to

Operator

comes of next Laurent the with from Your line Grandet question Guggenheim.

Laurent Grandet

everyone and Yeah. me for Thank Good in. morning you. thanks squeezing

So two questions, on Canada. one

definitely So Canada is improving.

gross it few sustainable please and bit rebound about could how give and there is what's the for next you and months So, color a the on quarters? the us going more and

Miguel Patricio

question. me let that Well, answer

I good are a very definitely quarter. you improving, right. is think absolutely Canada had

big the a are we from way improving. in with job we promotions innovation was was marketing. on year. was year pipeline, not our XX% And that margin promotional disciplined we exactly for the very in only I there did and increase more on great. we with being and about are much what that's evolving that last that digital so this terms Canada last on XX% with not it margin of is satisfied ROI calendar it year is it big promotions think I'm and and creativity better to marketing that started much that - But reflects, Canada

think I ago. year had we having and just a a different Canada than one a we - very are half

Laurent Grandet

your within a that you on brands year plan. that six, maybe of And on [indiscernible] and now the last to compared question we straight down Thanks. broader are laid [ph] so months implementation eight

could us some expected think are and why? ahead So some tell implementing you - what or you you've you of been very maybe where in you're think behind space and initiatives strategic and maybe sitting you you successful what

Miguel Patricio

I overall, are excited we deep our would that, very and all areas. transformation say in And it's with plan. it's

all going after We a are and year, year more from imagine we this in we we could say much would that all that accelerated and evolving in meetings, especially working are than rate a I through home. are one Zoom doing

areas baseball, to surprised all journey. are finished analogy that of first say the finance us all the we supply of a this areas marketing the to But an Using all velocity, in areas, would it company. we agility inning. I in that having So to from is

of there the we is the But are still possibility, about to to are We going game inning. a ahead but excited evolution. now play, second us the big

Laurent Grandet

and [indiscernible] work. it Good Thanks. you very on much. Thank plan. I'll pass

Miguel Patricio

Thank you.

Operator

of Powers Deutsche from line Steve comes question the Bank. with next Your

Steve Powers

Yeah, build last maybe hey, that thanks. question a And on bit. to

spoke Heinz. remarks. extent the I you in standing back into XXXX, beyond? your and as think to you morale since it's Kraft on while also you go teams some you past year 'XX today step little since did helping that engagement about think about about improve us as been And the prepared progress over satisfaction how - detail how those engagement the update customer a feeds and in Miguel made current outlook can we perceive guess at you journey your speak employee and the and I to and retailer into forward against

Miguel Patricio

our comment U.S. Carlos will specifically will in satisfaction on engagement. about employee I ask Sure. talk customer I to engagement

We have when say from great doing I — is also course everything I of that all maybe we this employee this, where more have is engaged. progress people would biggest well. shift And on that engagement part research, we have the as our much been is qualitatively. with quantitative say things among that but

cooperative So, way. that We've more had much our was we much a way. we faster working a in in of more eliminating is team be the would organized way to had much much company that different and I and is this - higher. already been that in in much, morale engaged year pandemic we silos were this say

sense. comment they still That can They are have have for a on the room that team. working engaged you ahead and in We improvement we and customer we excited Carlos, understand the about leaving. more side? are journey have again, said, continue maybe that we'll much a being strategy the they

Carlos Abrams-Rivera

much we a we that what Miguel are tell Sure, in with I level we have than agile were is the now that across engagement, do. our place working Related that saying seen way year company. is ago. can an are The Miguel. customers teams to different I entire what to Thank the mindset we you testify of a can you. And

retailers. build been We trust with key able have now our to

are of the a are in part and that we our in We past that. includes in - and transparency, level recognizing fact are a that also working seen hadn't retailers partners

a - in collaborations we it's done directly it that hear doing a now we Heinz. Kraft hadn't think the and feels that way like we're that them when new we past. - I work because So know we've the tried that have the that because we We now them in from with take of

us on, but So something to for build for to continue question. thanks the

Steve Powers

Thank you.

Operator

call to to time, And would would at Mr. like I over the currently Chris turn back Jakubik. this

Christopher Jakubik

everybody Thank you today. us joining and thanks for

Andy calls. take to Michael questions For analysts be and for be available that media myself your for have them. Larkin will Mullen follow-up available will And the

So joining day. for great and today again, us thanks a everybody have

Operator

Ladies thank for and today's call. conference gentlemen, you concludes This participating.

may You disconnect. now

The Kraft Heinz Company (KHC) 29 Apr 212021 Q1 Earnings call transcript