Kraft Heinz's new CEO Miguel Patricio is finally getting some praise from Warren Buffett's Berkshire Hathaway for coming in and saving the once sinking packaged food ship.
Berkshire Hathaway Vice Chairman Greg Abel said Saturday at the company's annual shareholder meeting he feels "comfortable" with Kraft Heinz, voicing confidence in the leadership of Patricio and his new management team. Abel is on the Kraft Heinz board along with fellow Berkshire Hathaway executive Tim Kenesey.
Berkshire owns about 26% of Kraft Heinz.
To be sure, this public comfort with the company is very new.
Kraft Heinz for years slashed investments in key brands in order to meet aggressive operating profit targets by backer 3G Capital since their 2015 merger. Top talent left the company.
One of the final black eyes came in February 2019, when Kraft Heinz took a $15.4 billion write-down on its natural cheese, Oscar Mayer cold cuts and Canadian retail businesses. Buffett himself then expressed displeasure in his investment at the 2019 Berkshire annual meeting held in March.
Enter Patricio as CEO in July 2019.
The former Anheuser-Busch marketing wizard wasted no time in setting up a new management team. In September 2020, Patricio sold part of the company's cheese business for $3.2 billion to France's Groupe Lactalis. That sale was unveiled at the company's investor day, where it outlined a more focused set of product priorities. He promised to boost marketing by 30% in top brands while also cutting $2 billion in costs through 2024.
In mid-February, Patricio then unloaded the Planters nut business to Hormel for $3.35 billion.
"We are a very different company than we were a year ago," Patricio told Yahoo Finance Live soon after the Planters sale.
The efforts have begun to pay off just as Kraft Heinz has benefited by people eating more food at home amidst the COVID-19 pandemic.
Kraft Heinz first quarter sales rose 3.9% and adjusted operating profits gained 11.6%.
Sales increased in all of the company's business segments: U.S. (up 2.5%); international (up 7.2%); and Canada (up 8.8%). Adjusted operating profits improved year-over-year in all segments, led by a 57.4% increase in Canada.
The stock has been one of the best performing packaged foods year-to-date, according to Yahoo Finance Plus data — shares are up 20%. Shares are still down some 47% over the past five years.
What’s hot from Sozzi:
Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, and LinkedIn.