(Reuters) - Kraft Heinz Co (KHC.O), North America’s No. 3 food and beverage company, reported lower-than-expected quarterly profit and sales, due to weak demand for its Velveeta cheese, Planters nuts and Oscar Mayer meats brands in the United States and Canada.
Shares of the company, which is backed by Warren Buffett and private equity firm 3G, were down 1.2 percent at $88.05 in after-hours trading on Wednesday.
U.S. sales, which account for more than two-thirds of Kraft’s total revenue, dipped 3.5 percent in the first quarter ended April 1.
Canada sales fell 12.2 percent in the quarter due to delayed contract agreements with key retailers, the company said.
Kraft said despite raising prices by nearly 1 percent, organic sales dropped 3.5 percent, as consumption fell across its brands in the United States, its biggest market.
A muted spending environment in North America coupled with changing consumer tastes toward fresh, organic food over processed food has forced the packaged food maker to launch new products and revamp its ready-to-eat meals to remove synthetic colors and preservatives.
Kraft, in January, had partnered with Oprah Winfrey to create a new healthy line of packaged food called Mealtime Stories.
The company’s net sales fell 3.1 percent to $6.36 billion, missing analysts’ average estimate of $6.45 billion, according to Thomson Reuters I/B/E/S.
Kraft, which aims to reduce $1.7 billion in costs by the end of 2017, said it continues to generate savings from zero based budgeting and supply chain initiatives in all areas apart from North America.
The company made a $143 billion bid for Unilever (ULVR.L), (UNc.AS) as part of its strategy to become a leading consumer goods giant by buying competitors, and cutting costs and jobs to drive profits.
However, the U.S. company walked away from a tussle with Unilever in February, after the Anglo-Dutch company rejected the offer.
Net income attributable to shareholders was $893 million, or 73 cents per share, in the first quarter, compared with $896 million, or 73 cents per share, in the year-earlier period.
Excluding certain items, Kraft earned 84 cents per share, missing analysts’ average estimate of 86 cents per share.
Reporting by Gayathree Ganesan in Bengaluru; Editing by Martina D'Couto