The Kraft Heinz Company (KHC) has reported a marginal fall of a 0.33 percent in profit for the quarter ended Apr. 01, 2017. The company has earned $893 million, or $0.73 a share, compared with $896 million or $0.73 a share, a year ago. On an adjusted basis, earnings per share were at $0.84 for the quarter compared with $0.73 in the same period last year. Revenue during the quarter dropped 3.14 percent to $6,364 million from $6,570 million in the previous year period. Gross margin for the quarter contracted 4 basis points over the previous year period to 36.16 percent. Total expenses were 75.63 percent of quarterly revenues, down from 76.97 percent for the same period last year. This has led to an improvement of 134 basis points in operating margin to 24.37 percent.
Operating income for the quarter was $1,551 million, compared with $1,513 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $1,885 million compared with $1,951 million in the prior year period. At the same time, adjusted EBITDA margin contracted 8 basis points in the quarter to 29.62 percent from 29.70 percent in the last year period.
“Although our top line results in the first quarter reflect a slow start to the year, we remain on track with our key initiatives,” said Kraft Heinz chief executive officer Bernardo Hees. “We are delivering product innovations, renovations and geographic expansion that positions Kraft Heinz to drive organic sales growth for the balance of 2017 and beyond. We also have good visibility on costs, savings and what we must do to deliver another year of profitable growth for The Kraft Heinz Company.”
Working capital turns negative
Working capital of The Kraft Heinz Company has turned negative to $508 million on Apr. 01, 2017 from positive $3,082 million on Apr. 03, 2016. Current ratio was at 0.95 as on Apr. 01, 2017, down from 1.46 on Apr. 03, 2016. Cash conversion cycle (CCC) has decreased to 2 days for the quarter from 42 days for the last year period. Days sales outstanding went down to 11 days for the quarter compared with 12 days for the same period last year.
Days inventory outstanding has decreased to 35 days for the quarter compared with 60 days for the previous year period. At the same time, days payable outstanding went up to 44 days for the quarter from 30 for the same period last year.
Debt increases substantially
The Kraft Heinz Company has witnessed an increase in total debt over the last one year. It stood at $32,680 million as on Apr. 01, 2017, up 29.85 percent or $7,513 million from $25,167 million on Apr. 03, 2016. Short-term debt stood at $2,932 million as on Apr. 01, 2017. Total debt was 27.05 percent of total assets as on Apr. 01, 2017, compared with 20.42 percent on Apr. 03, 2016. Debt to equity ratio was at 0.56 as on Apr. 01, 2017, up from 0.43 as on Apr. 03, 2016. Interest coverage ratio deteriorated to 4.96 for the quarter from 6.08 for the same period last year.
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