Food And Drink Heavyweights Report Lite Results

Food And Drink Heavyweights Report Lite Results

about 4 years ago2 mins

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Food and drinks heavyweights Nestlé, Kraft Heinz, and PepsiCo reported earnings on Thursday, but their empty stomachs are all a-rumblin’ for some future growth 🍽

What does this mean?

The three companies each had something different to show for last year. Pepsi and Kraft Heinz both reported better-than-expected profit, but unlike Pepsi, Kraft’s revenue came up short. Nestlé, meanwhile, missed investors’ forecasts on both counts.

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Still, it could’ve been their growth expectations for this year that really left investors wanting. Pepsi ruined the mood with a disappointing growth forecast, while Kraft Heinz’s investors were likely wondering when, if ever, its shrinking revenue would reverse course. As for Nestlé, it said it’d need at least another year to achieve its previously promised revenue growth. It did sell off chunks of its business last year, after all…

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Why should I care?

The last few years have seen more and more consumers turn to non-processed food and own-label brands. Even so, Nestlé’s kept growing thanks to its strong petcare and coffee businesses, while Pepsi’s made some savvy improvements to its snacks business 🍿 Kraft Heinz, on the other hand, has been all but left behind, resulting in a $15 billion write-down of some of its brands’ values. In other words, it’s lowered the value of some of its assets on paper, acknowledging they were overvalued.

Nestlé’s lowered growth forecast didn’t make any mention of the coronavirus – or how disruptive it could be to supply and demand. More conspiratorial investors might find the absence conspicuous, given that the epidemic could cause an as yet untold slowing of the global economy – and maybe even, in the worst case, a recession 🧐 It’s particularly odd considering that’d be where a company like Nestlé should come into its own: consumers tend to buy staple products no matter the economic weather, making the firm’s earnings relatively resilient in a downturn.

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