Kraft-Heinz thrives as pandemic spurs home dining

Kraft Heinz Co beat first-quarter revenue and profit estimates on Thursday as a year-long surge in demand for consumables including Lunchables crackers and Kraft Macaroni & Cheese held up even as the U.S. economy gradually reopened.

Pandemic-induced curbs that led people to eat at home and rely on packaged meals proved to be a boon for the Chicago-based company, which has struggled with tepid sales and was forced to write down the value of several brands by billions of dollars over the past two years.

But the surge in demand and stockpiling in some parts of the world due to a resurgence in COVID-19 cases have fueled a jump in prices of commodities such as sugar, wheat and soy.


"Similar to industry peers, our cost pressures have accelerated since the start of the year," Chief Executive Officer Miguel Patricio said in prepared remarks before the earnings call.

The packaged food maker forecast mid-single-digit inflation in 2021 with acceleration beginning in the second quarter. Peer Mondelez on Tuesday warned of price hikes to combat higher raw material costs.

"We continue to think our cost-benefit equation is manageable", Patricio said, adding that its forecast does not include any pricing changes.

Shares of Kraft, which projects current-quarter organic net sales to rise by a mid-single-digit percentage, rose 2.3% in morning trade.

Sales in the Jell-O maker's international markets including the UK, Australia and Latin America, which account for a fifth of its revenue, rose 7.2%.

Net sales rose to $6.39 billion in the three months ended March 27, surpassing analysts' average estimate of $6.24 billion, according to IBES Refinitiv.

Excluding items, Kraft earned 72 cents per share, beating estimate of 59 cents.