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Kraft Heinz Fundamental Analysis December 2023

Kraft Heinz Fundamental Analysis

Resume of Kraft Heinz Fundamental Analysis. Based in Pittsburgh, PA, The Kraft Heinz Company (KHC) ranks among the foremost North American companies in the consumer packaged food and beverage sector. The company produces and sells a wide range of products, including sauces and condiments, cheeses, dairy items, various meals, meat products, beverages, coffee, and other grocery essentials.

The company’s portfolio features well-known brands such as Heinz, Kraft, Oscar Mayer, Philadelphia, Velveeta, Lunchables, Maxwell House, Capri Sun, and Ore-Ida. Impressively, Kraft Heinz markets its products in approximately 190 countries and territories globally.

The company’s significant milestone was the merger in July 2015, when Kraft Foods Group, Inc. (“Kraft”) merged into a wholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”). This merger resulted in the renaming of Heinz to The Kraft Heinz Company, and H.J. Heinz Holding Corporation was subsequently renamed Kraft Heinz Foods Company. Both Kraft and Heinz have over a century’s legacy in the food industry.

Operational Structure.

It’s important to note that in the second quarter of 2022, Kraft Heinz altered its internal reporting structure and its segment reporting. The company merged its United States and Canada operations to create a single North America zone. Consequently, the company now operates under two main segments: North America, which accounts for 76% of total revenues as of the third quarter of 2023, and International, comprising 24% of revenues.

Additionally, on January 30, 2019, Kraft Heinz announced the successful sale of its Indian brands, including Glucon-D, Nycil, Complan, and Sampriti, to Zydus Wellness Limited.


According to Kraft Fundamental Analysis, we detected several reasons to buy the stock.

Strategic Pricing Initiatives.

Kraft Heinz is making strides in its performance through strategic pricing initiatives. These have helped the company maintain its margin performance amid inflation. In the third quarter of 2023, this approach led to top-line growth and improved margins. The company recorded a 1% year-over-year increase in quarterly net sales, amounting to $6,570 million, with organic net sales up by 1.7%, thanks primarily to a 7.1 percentage point rise in pricing. This increase is mainly attributed to higher list prices countering rising input costs. In its North America and International segments, pricing increased by 5.8 and 11.6 percentage points, respectively, resulting in a 396 basis point expansion in adjusted gross margin to 34%.

Strengthen of its core pillars.

Kraft Heinz is also prospering through its three core pillars: Foodservice, Emerging Markets, and U.S. Retail Grow platforms. Its Foodservice business saw a 9% increase in sales and market share in Q3 2023, while its Emerging Markets recorded double-digit organic net sales growth. The U.S. Retail GROW platforms also saw significant growth, with Taste Elevation and Easy Meals organic net sales increasing by 7% and 5%, respectively.

Strong outlook.

The company’s future looks promising, thanks to its focus on enhancing productivity and operational efficiencies. This approach is expected to drive growth in key areas. Management has raised its adjusted EPS and EBITDA guidance for 2023, with adjusted EBITDA expected to grow by 5-7% at constant currency.

Company evolution.

In its transformation phase, Kraft Heinz introduced AGILE@SCALE in February 2022, aiming to enhance agile capabilities through partnerships with technology firms. This strategy is contributing to growth and efficiency throughout the company’s value chain. The company also reached its target net leverage of approximately 3.0X in Q3 2023.

Efficient operating model.

Kraft Heinz’s new operating model, introduced in September 2020, focuses on five key elements: People with Purpose, Consumer Platforms, Ops Center, Partner Program, and Fuel Our Growth. This model has been instrumental in driving the company’s growth and market position. Recent strategic acquisitions, such as Companhia Hemmer Indústria e Comércio, Just Spices GmbH, and Assan Foods, along with the divestment of certain businesses, underscore Kraft Heinz’s commitment to refining its portfolio and focusing on growth areas.

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