US segment

As we mentioned in the previous part, Kraft Heinz (KHC) operates in four geographic segments—the US, Canada, Europe, and the Rest of World. The US segment’s net sales were $4.7 billion—a rise of 0.17% compared to the same quarter last year. Despite deflation in key input prices—mainly dairy and coffee—pricing improved 0.1 percentage points. Gains from innovation in Lunchables and P3, gains in coffee, and whitespace expansion in foodservice led to the 0.1 percentage point increase in volume or mix.

Kraft Heinz in Fiscal 1Q16: How Did Its Segments Perform?

The adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for this segment rose by 33% to $1.5 billion. Also, benefits from cost-saving initiatives and favorable pricing net of commodity costs, mainly in the dairy category, drove the rise in the EBITDA. It was partially compensated by volume declines in ready-to-drink beverages and frozen nutritional meals.


The Canada segment’s net sales were $504 million. The net sales fell by 8.5%—compared to the same quarter last year. It was mainly due to a currency effect of -10%. Organic net sales rose 1.5%—compared to 1Q15. The Canada segment’s adjusted EBITDA rose 34% to $151 million. Gains from cost-saving initiatives and favorable pricing net of higher local input costs drove the increase. It was partially balanced by an unfavorable volume or mix. There was a 14.2 percentage point impact from currency translation.


The Europe segment’s net sales were $553 million. The net sales fell 12%—compared to 1Q15. It was due to a currency impact of -3.9% and a -4.1% effect from divestitures. Organic net sales fell 3.7%—compared to 1Q15. The segment’s adjusted EBITDA fell 17.3% to $177 million. The currency impacted it by -3.7% along with an increase in marketing investments.

Kraft Heinz in Fiscal 1Q16: How Did Its Segments Perform?

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 $798 million—down 15.6% compared to the same quarter a year ago. A currency impact of -26% caused the fall.

Also, a -17% effect from the devaluation of the Venezuelan bolivar, taken in June, partially played a role in the fall. The segment’s adjusted EBITDA fell 12.1% to $167 million. It was mainly due to a -38.2% currency impact. Excluding these factors, the EBITDA performance was led by a favorable volume or mix.

The company’s peers in the industry include Pilgrim’s Pride (PPC), McCormick & Company (MKC), and Snyder’s Lance (LNCE). They reported EBITDA of $235 million, $157 million, and $47 million, respectively, in their last reported quarter. The First Trust NASDAQ-100 Ex-Technology Sector IndexSMFund (QQXT) and the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) invest 1.5% and 1.0% of their portfolios in Kraft Heinz.

Latest articles

19 Jul

Afya's IPO Sees Strong Listing Gains

WRITTEN BY Mohit Oberoi, CFA

Afya (AFYA) listed on the Nasdaq Global Select Market on July 19. The company priced its IPO at $19 per share.

19 Jul

What to Watch For in Amazon's Q2 Earnings

WRITTEN BY Sanmit Amin

e-Commerce giant Amazon (AMZN) is scheduled to report its second-quarter earnings results after the closing bell on July 25.

19 Jul

Barrick Gold Reaches Deal to Buy Acacia Mining

WRITTEN BY Anuradha Garg

After a long standoff, Barrick Gold (GOLD) and Acacia Mining (ABGLF) have reached an agreement.

19 Jul

Comcast Shares Pop on Goldman's Optimism

WRITTEN BY Ruchi Gupta

Comcast (CMCSA) shares popped after Goldman Sachs issued a positive note on the company recently. Goldman upgraded its rating for Comcast to "buy" from "hold."

19 Jul

Why Analysts Are Bearish on Netflix Stock

WRITTEN BY Aditya Raghunath

Netflix stock fell over 10.0% on Thursday and is down 0.5% today as well.

On Thursday, pet retailer Chewy (CHWY) reported its first-quarter results after the market closed. The company reported its earnings for the first time.