Kraft Heinz Details New Strategic Transformation Plan

Kraft Heinz Co KHC detailed Tuesday a new strategic transformation plan that targets around $2 billion in cost cuts through 2024.

Operating Model: The core element of Kraft Heinz's transformation is a new operating model with five elements, including:

  • Reaffirming employees as the most important resource;
  • Shrinking the portfolio from 55 individual categories to six consumer-driven platforms;
  • Creating a new supply chain that is faster, adaptable, and offers greater visibility;
  • Developing new strategic partnerships; and
  • Reinvesting efficiency gains to better fuel growth.

Long-Term Financial Goals: Kraft laid out a series of long-term financial goals as part of its transformation. These include organic net sales growth of 1% to 2%, adjusted EBITDA growth of 2% to 3% and adjusted EPS growth of 4% to 6% with greater than or equal to 100% free cash flow conversion.

Changing The 'Mind-Set' Prior blunders resulted in Kraft losing market share in key categories to lower-priced store brands. The company recorded $2.9 billion in impairment charges in July after reducing the value of its assets by more than $16 billion last year.

Kraft's new objectives stem from management's realization that prior decisions were "too short term" in nature, Kraft CEO Miguel Patricio told The Wall Street Journal. The company is now "changing that mindset."

Kraft's stock traded around $32.12 per share at the time of publication.

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Posted In: NewsMediafoodMiguel Patricio
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