US food giant Kraft Heinz Co managed to beat Wall Street's profit expectations on Thursday after it released its earnings report for the third quarter.
The company attributed its better-than-expected performance on its cost-cutting efforts. Kraft Heinz also announced a slew of new strategies to improve its bottom line, including huge investments in marketing its neglected brands.
The company still reported drops in its earnings report, but the figures did manage to beat initial analysts' expectations. Earnings for the quarter fell by 9.2 percent to 69 cents per share when compared to the same period last year. The figure still managed to beat analysts' expectations of 54 cents per share for the quarter.
Net sales for the quarter fell by 5 percent to $6.08 billion, slightly missing analysts' expectations of $6.13 billion. Kraft Heinz's cost-cutting efforts have resulted in a 25 percent drop in its expenses to $767 million for its third-quarter ending on September 28. The reduction in its costs was also supplemented by a 1 percent increase in prices, further lifting up its earnings.
The Berkshire Hathaway-backed food and beverage conglomerate has had lackluster sales for the past 13 quarters. The company had also been criticized for its write-down of some of its more well-known brands, includes its popular Oscar Mayer brand.
Its previous poor performance was also attributed to increasing competition from private-label brands, such as those owned by retail giants Walmart, Kroger, and Costco.
In an attempt to continue the firm's earnings momentum, newly appointed CEO Miguel Patricio outlined a detailed plan for the company following a strategic review of its business. Patricio, who was appointed by the company's second-largest investor 3G Capital, stated that part of the plan will be to funnel more funds into the marketing of its flagship brands.
The strategy also included the reduction of its project launched in the next year as it shifts its focus into marketing its neglected products. Patricio mentioned in a post-earnings call that the company is investing a lot of its funds and energy into planning for the future.
Following the release of its third-quarter profits, Kraft Heinz saw its shares surge by as much as 13 percent to $32.23 per share in midday trading. Since its first writedown in February and the announcement of an investigation into its procurement practices by the US Securities and Exchange Commission (SEC), the company's stock has tumbled by more than 40 percent.
