Kraft Heinz Announced Its Quarterly Dividend and 2016 Agenda
Did Kraft Heinz End Fiscal 2015 on a Good Note?
Dividend declared
On February 25, 2016, Kraft Heinz (KHC) announced a regular quarterly dividend of $0.575 per share of common stock. This dividend will be payable on April 8, 2016, to shareholders of record as of March 18, 2016. The company increased its quarterly dividend by 4.5% on November 5 to $0.575 from the prior dividend of $0.55 per share. The first increased dividend was paid on November 20, 2015, to shareholders of record as of November 16, 2015. Kraft Heinz has a dividend yield of 2.18%, as of February 26. The company paid $1.12 per share in the dividend in 2015. Kraft Heinz plans to remain committed to a strong dividend payout in the future.
2016 agenda
In its 4Q15 earnings call, the company mentioned its 2016 agenda. It expects to manage ongoing currency and consumption trend headwinds. It plans to focus on delivering profitable sales growth by improving sales execution in a challenging retail environment. Kraft Heinz expects to achieve this by building on innovation success through “big bets” in each segment and increase its working media investments behind the brands. It expects to make progress towards achieving best-in-class margins by delivering zero-based budgeting savings, a ramp-up procurement scale, and a manufacturing footprint. It also plans to lay the groundwork for future growth by building out revenue management capabilities in North America. It plans to achieve this by exploring whitespace opportunities in foodservice and international markets along with developing a performance-driven culture inside Kraft Heinz.
Kraft-Heinz merger integration update
Management also provided a merger integration update. It incurred $829 million in costs and ~$225 million in capital expenditures in 2015. The company continues to expect $1.9 billion pre-tax costs including ~$1.1 billion in cash. It also expects ~$1.1 billion of capital expenditures. Kraft Heinz realized ~$125 million in savings in 2015. It targets cost savings of $1.5 billion by 2017.
Competitors
The company’s peers in the industry include Pilgrim’s Pride (PPC), McCormick & Company (MKC), and Keurig Green Mountain (GMCR). They reported positive YTD (year-to-date) returns of 7.3%, 9.3%, and 2.1%, respectively, as of February 26. The Guggenheim Defensive Equity ETF (DEF) and the Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invest 4.4% of their portfolios in Keurig Green Mountain stock.
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