Kraft Heinz Co on Wednesday reported a surprise rise in quarterly revenue and topped earnings estimates as the Jell-O and Philadelphia Cream Cheese maker benefited from price increases and improved supplies to retailers.
The results follow those from General Mills and Kellogg and underscore how multiple price increases over the past year to counter higher costs tied to labor, ingredients and transportation are yet to crimp demand significantly.
Kraft said average selling prices rose 15.4 percentage points in the third quarter, but sales volumes slipped 3.8 percentage points.
“Sales were strong, with volumes only slightly worse than the Street modeled and pricing higher,” J.P. Morgan analyst Ken Goldman said in a note.
Packaged food makers are also getting a helping hand from inflation-weary consumers sticking to the pandemic-fueled preference for cooking at home, though analysts have cautioned that the firms may be nearing their ceiling on price hikes.
Kraft Chief Executive Miguel Patricio said there was continued consumption growth across all income levels in the quarter with market share gains in categories like Lunchables and Kraft Mac & Cheese cups as the company had increased capacity by fixing supply-chain constraints.
Kraft’s market share is directly linked to on-shelf availability, said CFRA analyst Arun Sundaram, adding that “if they get products on the shelves, the consumer is buying it despite the price increases.”
Net sales rose to $6.51 billion from $6.32 billion a year earlier. Analysts on average had expected $6.27 billion, according to IBES data from Refinitiv.
Excluding items, earnings of 63 cents per share beat expectations of 56 cents.
Shares of the company reversed course to trade marginally lower amid broader market declines.