CPB Campbell Soup Co

Kraft Heinz Co. posted a better-than-expected profit in its latest quarter as the food company offset declining pro-forma sales by slashing its expenses.

The packaged food industry has faced a bleak outlook of late, as consumers opt for fresher alternatives to products like Kraft's classic macaroni and cheese, Campbell Soup Co.'s iconic canned dinners and the like. Kraft has pushed to attract new consumers with more health-conscious fare, including a reformulated macaroni and cheese with no artificial colors and a new frozen dinner brand called Devour.

The new offerings may not have caught on yet. In the latest quarter, half of the company's four regions posted a decline in net sales year-over-year when assuming Kraft and Heinz were a merged company in the year-earlier period.

The U.S., the company's biggest market, posted a 1.2% retreat, while Europe fell 14.5%. Canada edged up 2%, while the rest of the world rose 4.4%.

Overall, sales declined 1.5% to $6.27 billion from $6.36 billion, assuming the companies had been joined. Kraft Heinz was formed in July 2015 by the merger of Kraft Foods Group and H.J. Heinz.

For the quarter ended October 2, Kraft Heinz earned $842 million, or 69 cents a share. A year ago, assuming Kraft and Heinz were a merged company, the company would have posted a loss of $168 million, or 14 cents a share. Excluding certain items, Kraft Heinz's adjusted per-share earnings rose to 83 cents from 44 cents.

The company handily beat Wall Street's profit forecasts but fell just short on revenue. Analysts surveyed by Thomson Reuters expected earnings of 75 cents a share on revenue of $6.3 billion.

Kraft Heinz, among the largest food makers in the world, was created by a 2015 merger of Kraft and Heinz. The company is run by Brazilian private-equity firm 3G Capital, which is known for its zero-base budgeting philosophy that calls for departments to justify every cent they spend every year. In the latest quarter, the company managed to trim general and administrative expenses by 42% to $805 million, on a pro forma basis.

Shares fell 1.3% to $85.11 after hours.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

November 03, 2016 17:35 ET (21:35 GMT)

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