Kraft Heinz (KHC) operates in four segments—the US, Canada, Europe, and the Rest of World. The US segment’s net sales were $4.5 billion—a fall of 3.7% compared to the same quarter last year. The adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for this segment rose by 1.4% to $1.1 billion. Cost saving initiatives and favorable pricing of net commodity costs, mainly in the cheese and meat category, drove the rise in the EBITDA.
The Canada segment’s net sales were $539 million. The net sales fell by 18.9% compared to the same quarter last year. It was mainly due to a currency effect of -16.3%. The organic net sales fell 2.6% compared to 3Q14. The Canada segment’s adjusted EBITDA fell 20.3% to $110 million. It was mainly driven by a currency effect of -17.9%.
The Europe segment’s net sales were $599 million. The net sales fell 13.9% compared to 3Q14. It was due to a currency impact of -11.1% and a -3.3% effect from divestitures. The organic net sales rose 0.5% compared to 3Q14. The segment’s adjusted EBITDA rose 8.3% to $222 million. The profit from cost saving initiatives, lower input costs, and favorable volume or mix led to the rise.
Rest of World
The Rest of World segment is comprised of Asia-Pacific, Latin America, Russia, India, the Middle East, and Africa. The segment’s net sales were $684 million—down 25.3% compared to the same quarter a year ago. A currency impact of -32.4% caused the fall. Also, a -12.8% effect from the devaluation of the Venezuelan bolivar, taken in June, partly played a role in the fall. The organic net sales rose 7.1% compared to 3Q14. The Rest of World segment’s adjusted EBITDA fell 29.4% to $125 million. It was mainly due to a -43.7% currency impact. However, cost savings initiatives partially offsetted the gains.
The company’s peers in the industry include Pilgrim’s Pride (PPC), McCormick & Company (MKC), and Keurig Green Mountain (GMCR). They reported net margins of 6.5%, 9.0%, and 11.7%, respectively, in their last reported quarter. The Vanguard Mid-Cap Growth ETF (VOT) invests 0.53% of its portfolio in Keurig Green Mountain stock.