Kraft and Heinz post lower sales in first post-merger earnings release

H J Heinz Co and Kraft Foods Group have reported fall in sales in the last quarter before their merger, creating a mammoth company in the packaged foods sector.

Sales at Heinz, which is backed by Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital, fell by 4.9% to $2.62bn (£1.69bn, €2.39bn), primarily due to the dollar strength. Sales at Kraft fell by 4.1% to $4.52bn because of weak demand for its beverages.

Kraft's net income rose to $551m in the second quarter ended on 27 June from $482m in the previous year. Net loss attributable to Heinz shareholders widened to $344m from $53m.

Heinz completed its merger with Kraft Foods Group on 2 July, just two days after the end of their second quarters, creating the third-largest food and beverage firm in North America and the fifth largest in the world.

Kraft shareholders have a 49% stake in the combined entity named Kraft Heinz Company, and the current Heinz shareholders own 51% on a fully diluted basis.

Looking ahead, Kraft Heinz said it expected about $1.5bn in cost savings by the end of 2017.

"The company is focused on the difficult and challenging process of integrating our two businesses," Kraft Heinz's CEO, Bernardo Hees, said in a statement.

"We have a lot of hard work ahead of us as we continue to design our new organization, always putting our consumers first."

Following the results, shares in the company are down 1.6% in after-hours trading.