Kraft Heinz (KHC) reported fourth quarter earnings on Thursday that beat Wall Street expectations, but broadly weaker sales pushed shares down 6% in early trade.
Here were the main numbers for Kraft Heinz fourth quarter, compared to Bloomberg estimates:
Net sales: $6.54 billion vs. $6.61 billion expected
Adjusted earnings per share: 72 cents vs. 68 cents
Organic revenue: -2.2% vs. -1.33%
“While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated,” Kraft Heinz CEO Miguel Patricio said in a statement.
Kraft Heinz’s management explained on the earnings conference call that the company would reveal its 2020 strategic turnaround plan at its May investor meeting. “2020 will be the first full year of what we expect will be a three stage turnaround,” Patricio said on the call. He also clarified that 2020 would be a year of stabilization, not a year of offense. “It’s a year we want to use to continue stabilizing the bottom line of the company.”
At the end of October, Patricio said that the company was not successful in innovating over the past two to three years and planned to cut the number of projects in half this year.
Amid those restructuring efforts, the company swung from an operating loss of over $14 billion in the comparable year-ago quarter to an operating profit of $594 million in Q4.
"We have taken critical actions over the past six months to re-establish visibility and control over the business. And we remain convinced Kraft Heinz has the potential to achieve best-in-class financial performance as we begin transforming our capabilities and making necessary investments in our brands based on deep consumer insights. Our turnaround will take time, but we expect to make significant progress in 2020, laying a strong foundation for future growth,” Patricio added.
2019 was a tumultuous year for the consumer staples giant. Its first-quarter 2019 financial results were delayed due to an SEC investigation into its accounting and procurement practices.
Then, in February of last year, Kraft Heinz revealed a massive $15 billion write down of its Kraft and Oscar Mayer brands and slashed its dividend by 36% to 40 cents per share from 62.5 cents per share.
“2019 was a very difficult year for Kraft Heinz,” Patricio said on the call. “It was also a period of new understanding.” He promised to be transparent with investors about what is going well at the company and what needs improvement. “Knowing you have problems is the first step.”
Patricio officially took over as CEO from predecessor Bernardo Hees July 1, 2019. He previously served as the chief marketing officer at beer giant Anheuser-Busch InBev.
Kraft’s stock, traded on the New York Stock Exchange, initially rose by 1% in pre-market before giving back those gains. On Wednesday, the stock closed at $30.04.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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