Kraft Heinz CEO Expecting Prices to Rise, Weighs M&A Deal

Kraft Heinz Co. said it was feeling pinched from the trade conflicts and a rise in costs, but continued to be willing to consider acquisitions to drive growth, said its CEO on Friday.

The company’s CEO Bernardo Hees has said that the Maxwell House coffee and Heinz Ketchup makers was being hurt from the retaliation over tariffs on U.S. aluminum and steel, which Canada retaliated with by placing tariffs on goods that ranged from coffee to sauces. Kraft Heinz described coffee as one of the key commodities it has in the U.S. as well as Canada.

Hees added that the company and the food industry in general were requesting exemptions from tariffs on certain products. Gillette and Febreze maker Proctor & Gamble said last July that some products it has that are sold in Canada would also be hit by the tariffs.

The top Canada trade negotiator and her counterpart in the U.S. began talks for a third day on Friday in an attempt to save the NAFTA or the North American Free Trade Agreement.

However, the conflict over trade is adding to pressure on Hees as well as industry peers that are attempting to fatten up profits even while consumers change eating habits and inflation in the country picks up.

Kraft Heinz surpassed expectations for quarterly revenue and profit when reporting its results in August as it increased prices for products and posted sales in the U.S. that were higher than had been expected for just the first time in a number of quarters.

Hees however said that cost pressures were creeping up from transportation and labor, plastic packaging and oil. He did not say the amount he thought that costs would hit the earnings of the company.

Many analysts are of the belief that Kraft Heinz, controlled by 3G Capital in Brazil and Berkshire Hathaway should include the acquisition amongst its investments.

Hees is one of the partners at 3G, known for big merger, such as creating Restaurant Brands International through combining Tim Hortons in Canada with Burger King in the U.S.

Since reaching a peak in February 2017, shares of Kraft Heinz have fallen over 40%.

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