This Warren Buffett Top 10 Stock Is Falling After Q4 Earnings Report - Here's Why

As of January 20024 filings, Kraft Heinz Company KHC was the 7th top holding by value of Warren Buffett’s Berkshire Hathaway BRK. Kraft-Heinz holdings were valued at $12.3 billion then.

Wednesday, the Kraft Heinz Company’s fourth-quarter 2023 sales of $6.86 billion fell 7.1% year-on-year (Y/Y), missing the consensus of $6.98 billion. Organic Net Sales decreased 0.7%.

Price increased 3.7 percentage points versus the prior year period, primarily driven by list price increases to mitigate higher input costs. 

Volume/mix declined 4.4 percentage points versus the prior year period, primarily driven by elasticity impacts from pricing actions and industry headwinds, particularly the reduction of Supplemental Nutrition Assistance Program (SNAP) benefits in the U.S.

Higher prices have weighed on food producers’ sales as more inflation-pinched consumers spend less.

Kraft Heinz logged lower earnings of $757 million, down 14.9% Y/Y, mainly due to non-cash charges related to the $162 million settlement of a defined benefit pension plan in the U.K. and unrealized losses on commodity hedges.

Adjusted EPS of $0.78 fell 8.2% Y/Y, beating the consensus of $0.77.

“In the fourth quarter, the industry faced headwinds that were driven by ongoing consumer pressure,” Kraft Heinz CEO Carlos Abrams-Rivera said.

Guidance: Kraft Heinz expects adjusted earnings of $3.01 to $3.07 a share in 2024 versus the consensus estimate of $3.03.

In fiscal year 2024, organic sales are expected to be between flat to 2% growth. It posted organic net sales growth of 3.4% in 2023.

The company expects a positive contribution from price throughout the year, with volumes inflecting positively in the second half of the year.

It expects the adjusted gross profit margin to expand between 25 and 75 basis points in fiscal 2024.

Kraft Heinz expects to see relatively lower sales in Q1 compared to the rest of 2024.

Price Action: KHC shares are down 6.17% at $33.90 on the last check Wednesday.

Warren Buffett. Photo by Kent Sievers on Shutterstock.