The Kraft Heinz Company (NASDAQ:KHC) Q4 2022 Earnings Call Transcript

Andre Maciel : Hi, Ken. Good morning. Thanks for the question. You have seen that in Q4, we happened to have — that we said we would have a relevant sequential improvement, which put us in Q4 in line with the 2019 gross margins. We expect in Q1 to maybe the gross margin to go a little bit down as we have contracts that are getting renewed and some inflation that was not passed over to us last year, now is going to affect us. And we had that contemplated in our guidance. But then — but you should expect somewhere close to flattish in Q1 compared to prior year and from there you should start to see expansion on a year-over-year basis. In terms of a ballpark, you should think about 50 bps to 100 bps, so on magnitude of gross margin expansion, which that is what’s allowing us to increase investments behind marketing, technology and people, which are so important to us.

Operator: Our next question comes from Pamela Kaufman of Morgan Stanley.

Pamela Kaufman : Can you talk about the competitive dynamics within your categories? In the prepared remarks, you indicated that private label share is increasing, but that is primarily coming from your branded competitors. So maybe if you could just elaborate on what you’re seeing there? That would be helpful.

Miguel Patricio : Maybe Andre and Carlos can comment on that.

Carlos Abrams-Rivera : Sure. Let me start. Thank you for the question, by the way. As you saw, and let me speak for the North America business first, and then maybe Andre can give you his perspective over other company. We do see the continued share improvements as we continue to go forward. I mean, in Q4, you saw that misadjusted share actually improved by 20 basis points. And when you look at the market share that is now misadjusted in December, it actually was flat. And what we’re seeing is that the bet that we’re making in terms of continuing to invest in our businesses in terms of renovating our key products, making sure we’re invest in innovation, make sure we invest in our marketing, that actually is paying us. So when you see that in terms of those particular platforms and brands that we want to continue to drive our growth are, in fact, driving the share improvements as well, whether that is in places like Lunchables, in places like Kraft Cheese, in places like Heinz Ketchup, Mac & Cheese, all those going to drive actually positive shares as you look at Q4.

So for us is, how do we continue to make sure we’re built on those. At the same time, that we are also making sure we have relatively the potential still some supply chain constraints that we have in a couple of categories. So for us, it’s making sure that as we are driving the investments that we’re making in the brands, that those are, in fact, already transferring into share improvements and now making sure that we are continuing to support the brands that are still a little bit challenged in terms of supply chain so that we can, in fact, unleash the continued growth of our retail environment.

Miguel Patricio: Andre, do you want to talk about is there anything you would like to add from an international standpoint on this question?