Kraft Heinz beats profit estimates as cost cuts pay off

Kraft Heinz Co reported a bigger-than-expected quarterly profit on Thursday as the company kept a tight leash on costs amid weak demand in North America.

Shares of the company, which is backed by billionaire-investor Warren Buffett and private equity firm 3G, were marginally up at $87.25 in after-market trading on Thursday.

The company said selling, general and administrative expenses fell about 15 percent to $760 million in the second quarter ended July 1.

Kraft, whose products include Heinz ketchup, Velveeta cheese and Oscar Mayer meats, aims to reduce $1.7 billion in costs by the end of 2017 through zero-based budgeting and supply chain initiatives.

The company's net income surged 50.5 percent to $1.16 billion, or 94 cents per share, in the latest quarter.

Excluding certain items, the company earned 98 cents per share, 3 cents ahead of analysts' average estimate, according to Thomson Reuters I/B/E/S.

However, the company's revenue fell 1.7 percent to $6.68 billion and missed analysts' average estimate of $6.73 billion.

U.S. sales, which account for more than two-thirds of Kraft's total revenue, dipped 1.2 percent in the quarter.

Like other processed packaged food makers, Kraft Heinz is bearing the brunt of increasing preference for healthier alternatives among U.S. consumers.

Kraft, which walked away from its $143 billion bid for Unilever, said sales in its Canadian business fell 6.4 percent due to discontinuation of certain cheese products.

Kraft also raised its quarterly dividend to 63 cents per share from 60 cents.

(Reporting by Gayathree Ganesan and Vibhuti Sharma in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)