US food heavyweight Kraft Heinz has posted a slump in full-year operating profit linked to a $3.7bn non-cash impairment loss.
In its fourth-quarter and annual results announcement today (12 February), Kraft Heinz said $1.4bn of the impairment was booked in the last three months of its 2024 fiscal year.
The “impairment charge was largely due to an intangible asset impairment on the Oscar Mayer brand”, the company explained with respect to the final quarter charge.
Operating income turned to a loss of $40m for the quarter, compared to a profit of $1.3bn a year earlier.
For the full year, operating profit slid 63.2% to $1.7bn, based on sales revenue of $25.8bn. Reported sales were also down to the tune of 3%, with organic growth dropping 2.1%.
CEO Carlos Abrams-Rivera described 2024 as “a challenging year with our top-line results coming in below our expectations” but accentuated the positive by adding “we remained disciplined in protecting profitability, while driving industry-leading margins, generating strong cash flow, and returning $2.7bn in capital to stockholders”.
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By GlobalDataLooking towards 2025, he told analysts in a post-results call: “We remain confident in our strategy. By building upon the advancements made in 2024 and executing with excellence, we anticipate improvement each quarter in our top-line performance.
“This will be driven by growth in emerging markets and global away from home, with US retail benefiting from actions we are taking to further implement our brand growth system. And we will do this while preserving profitability, something we have proven we know how to do well.”
There was a marked contrast in performance between North America and emerging markets. On a year-on year basis, Kraft Heinz saw sales dip by 3.9% in the quarter and by 2.9% in the 12-month period in North America.
Sales in emerging markets fell 6.8% and 4.3%, respectively.
for North America, Abrams-Rivera said: “Last quarter we discussed a couple of core categories that are driving year-over-year top-line pressure, including Lunchables, Kraft Mayonnaise, Kraft Mac & Cheese and Capri Sun.
“Across each of these brands, we have kicked off the brand growth system, running deep, forensic-like assessments that will uncover the most meaningful opportunities to drive brand superiority.”
He added: “On Lunchables, we are strengthening the core and expanding the occasions.”
Net income for the year climbed to $2.13bn from $757m but was down 3.5% on a quarterly basis at $2.75bn.
For 2025, Kraft Heinz expects organic net sales to be flat to down 2.5% and constant currency adjusted operating income to be down 1% to 4%.
