Kraft Heinz Company ( KHC ) reported a second-quarter FY24 sales decline of 3.6% year-on-year to $6.48 billion, missing the analyst consensus estimate of $6.55 billion.

Sales in North America declined 3.1% Y/Y, and International Developed Markets dropped 5%. Organic net sales slipped 2.4%.

Gross profit increased by 1.5% Y/Y to $2.29 billion, with the margin expanding 180 points to 35.4%.

Operating margin for the quarter was 8.1%, and the operating income decreased 62.1% to $522 million.

Selling, general and administrative expenses, excluding impairment losses, rose 3.7% to $918 million. Adjusted EPS of $0.78 beat the analyst consensus of $0.74.

Kraft Heinz ( KHC ) held $902 million in cash and equivalents as of June 29. Operating cash flow for year-to-date totaled $1.7 billion, with a free cash flow of $1.2 billion.

As of June-end, the company had remaining authorization to repurchase $2.4 billion of common stock under the publicly announced share repurchase program. 

“Our second quarter net sales growth came in lower than originally anticipated, as consumer sentiment remains cautious,” said CEO Carlos Abrams-Rivera.

Abrams-Rivera continued, “While we are now expecting a more gradual top-line improvement in the back half of the year, we continue to unlock efficiencies that are allowing us to make accretive investments in our brands, grow profits, and drive future sales growth.”

Kraft Heinz ( KHC ) declared a regular quarterly dividend of $0.40 per share of common stock payable on Sept. 27 to stockholders of record as of Aug. 30.

Outlook: Kraft Heinz ( KHC ) expects FY24 adjusted EPS of $3.01 – $3.07, which is the same as prior expectations and against the estimate of $3.01.

The company sees FY24 organic net sales to be down 2% to flat versus the prior year, compared to the previous expectation of 0% to 2% growth.

Price Action: KHC shares are trading higher by 2.54% at $34.70 in premarket at the last check Wednesday.