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(Reuters) -Kraft Heinz raised its full-year profit forecast after beating first-quarter expectations on Wednesday, as price hikes and resilient demand help the Jell-O maker cushion a blow from higher commodity costs.
Shares of the Philadelphia Cream Cheese maker were up 2.6% in premarket trading.
The packaged food maker, like other U.S. peers such as Kellogg, Coca-Cola Co and General Mills, has been increasing product prices steadily to protect profits from rising costs of some raw materials like vegetable oils, wheat and dairy.
But even as inflation squeezes household budgets, consumers have refrained from trading down to cheaper alternatives and are still willing to pay more for their favorite snack brands despite multiple rounds of price hikes.
The company expects adjusted earnings between $2.83 to $2.91 per share for 2023, above the prior target of $2.67 to $2.75 per share. Analysts on an average have forecast $2.72 per share.
The Lunchables maker’s strong outlook echoes comments from peers PepsiCo Inc and Mondelez, who have lifted their annual forecasts in recent months on the back of price increases.
The company reiterated its target for 2023 organic net sales growth of 4% to 6%, compared to 2022.
Excluding one-off items, Kraft Heinz earned 68 cents per share, topping analysts’ estimate of 60 cents per share.
Its net sales rose 7.3% to $6.49 billion in the first quarter, while analysts on average expected $6.4 billion, according to Refinitiv IBES data.
Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Milla Nissi
