Kraft Heinz on Thursday reported quarterly earnings that topped analysts' expectations, but sales continued to decline as executives formulate a turnaround plan.
Shares of the company jumped 11.3% in morning trading. As of Wednesday's close, shares were down by about 33% this year, giving the food company a market value of $34.8 billion.
"While our third-quarter results remain below our potential, we showed sequential improvement versus the first half, and I believe we are beginning to operate the business better," CEO Miguel Patricio said in a statement. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our strategic direction."
The company is developing a plan for 2020 to revive Kraft Heinz's business, which has struggled with stalling sales and falling profits.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Kraft Heinz reported fiscal third-quarter net income of $899 million, or 74 cents per share, up from $619 million, or 50 cents per share, a year earlier.
Excluding gains from the sales of its Canadian cheese business, restructuring expenses and other items, the food giant earned 69 cents per share on an adjusted basis, topping the expected 54 cents per share. A lower-than-expected interest expense as a result of refinancing helped lift earnings.
In August, Kraft Heinz withdrew its full-year 2019 forecast after reporting weak second-quarter results. The company declined to provide an updated outlook Thursday. CFO Paulo Basilio, who returned to the role in September amid a broader executive shakeup, said investors should expect earnings and revenue to be "generally similar year-over-year" to the third quarter's results.
Net sales during its third quarter dropped 4.8% to $6.08 billion, missing expectations of $6.13 billion.
In the United States, which accounts for roughly 70% of Kraft Heinz's revenue, demand for its products continued to decline. Despite price hikes on items like Oscar Mayer cold cuts, Philadelphia Cream Cheese and Lunchables, net sales for the company's home market shrank by 1.6%.
Patricio told analysts on the conference call that the company is developing nine "transformational" projects that will aim to make Kraft Heinz more efficient and improve its revenue. The company plans to significantly increase its media spending and revamp its product development process.
"Innovation is an area that we have to improve dramatically," Patricio said.
He told analysts that in his previous role as chief marketing officer at Anheuser-Busch InBev, his team worked to reduce the timeline to bring new products to the market from two years to six months.