Kraft Heinz saw net sales decline in the final quarter of the year as a drop in sales volumes outstripped price rises in the period.

Net sales in the three months to 31 December fell 7.1% to €6.9bn, largely driven by a 6.1% impact from the inclusion of a 53rd trading week in the prior year.

Organic net sales declined by 0.7% despite a 3.7% increase in pricing as volume/mix declined by 4.4%.

Kraft Heinz said volume driven by elasticity impacts from pricing actions and industry headwinds, particularly the reduction of SNAP (Supplemental Nutrition Assistance Program) benefits in the US.

Net income declined 14.6% versus the year-ago period to $757m, primarily driven by non-cash charges related to the $162m settlement of a UK defined benefit pension plan in the current year period, lower adjusted EBITDA versus the prior year period, and unrealised losses on commodity hedges in the current year period.

Gross profit margin increased 180 basis points to 33.8%, but a 5.3% decline in adjusted EBITDA was driven by the impact of the previous year’s 53rd week, higher supply chain costs, investment in market and R&D, commodity costs and unfavourable volume/mix.

For the full 2023 financial year, net sales increased 0.6% to $26.6bn, including a negative 1.8 percentage point impact from a 53rd week.

Net income increased 20.2% to $2.8bn, driven by higher adjusted EBITDA versus the prior year period and lower non-cash impairment losses.

“I’m proud of the results we delivered in 2023 and the progress we’ve made as a company throughout the year,” said Kraft Heinz CEO Carlos Abrams-Rivera.

“We delivered net sales growth across each of our key pillars: global foodservice, emerging markets, and US retail grow platforms. We laid out action plans early in 2023 to drive market share and volume improvement – and they worked. We also executed well against our efficiency programme, unlocking and powering it in large part with our tech-enabled methodology.

“In the fourth quarter, the industry faced headwinds that were driven by ongoing consumer pressure. Looking ahead, we expect some of these pressures to dissipate, particularly as the reduction in SNAP benefits is lapped.

“For 2024, we expect continued growth for Kraft Heinz. We’ll keep a strong focus on execution against our strategy, supported by investments we’re making in our brands and our people. We’re confident we have the right strategy in place to deliver profitable growth and create value for our stockholders.”

Bernstein analysts said the “mixed bag” of results were not too far from consensus estimates and its 2024 outlook was in line with expectations.

“Overall, it seems that Q1 24 will remain under pressure, but performance could improve thereafter as we lap the step up in SNAP spending from last year. Guidance seems appropriately conservative, given all the uncertainty over the pricing and volume outlook.”