Adjusted EBITDA increased 23.1% in the second quarter at recently merged Kraft Heinz (KHC) despite a dip in organic net sales as integration cost savings kicked in.
Second quarter sales were up 160% to $6.8bn due to the merger of Kraft and Heinz, but that figures was 4.7% down verses pro forma net sales a year ago as it was dragged down by a 4 percentage point negative impact from currencies.
Organic net sales decreased 0.5% versus the year-ago period. Pricing increased 1.6 percentage points driven by the United States, Rest of World and Canada, despite deflation in key commodities.
Adjusted EBITDA increased 17.7% to $2.1bn, despite a negative 5.4 percentage point impact from currencies, driven by gains from cost savings initiatives and favourable pricing net of key commodity costs.
Operating income was up 268% to $1.64bn after the merger.
Kraft Heinz said the results “reflected significant gains from the ongoing integration of Kraft and Heinz” but were partially offset by currency translation and a higher tax rate.
United States net sales were $4.7 billion, down 1.9%. Pricing increased 1.2 percentage points despite deflation in key commodities, primarily in dairy and coffee.
Europe net sales were down 6.9% to $578m, primarily due to a negative 2.5 percentage point impact from divestitures and a negative 2.1 percentage point impact from currency. Organic Net Sales decreased 2.3% and pricing decreased 2.4 percentage points.
Kraft Heinz CEO Bernardo Hees said: “By implementing our integration program and improving our performance in the marketplace, we continued to drive results in the second quarter.”
“However, to sustain our momentum, we must remain focused on profitable growth, innovations to meet consumer needs in a challenging environment, and improving our operations. We’re off to a good start, but there is still much work to be done.”