| Imagery Source: Wikimedia Commons / Kraft Foods Incorporated |
| Information Source: The Kraft Heinz Company |
| Second Quarter Highlights |
- Net sales decreased 1.9%; Organic Net Sales(1) decreased 2.0%
|
- Gross profit margin decreased 100 basis points to 34.4%; Adjusted Gross Profit Margin(1) decreased 140 basis points to 34.1%
|
- Operating income was a loss of $8.0 billion, driven by non-cash impairment losses of $9.3 billion; Adjusted Operating Income(1) was $1.3 billion, down 7.5%
|
- Year-to-date net cash provided by operating activities was $1.9 billion, up 12.6%; Free Cash Flow(1) was $1.5 billion, up 28.5% and Free Cash Flow Conversion(1) increased 31pp to 96%
|
- Year-to-date return of capital to stockholders was $1.4 billion
|
| The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz” or the “Company”) today reported financial results for the second quarter of 2025. |
| “We are proud to play a vital role in families’ lives, and our commitment to delivering superior, affordable, and accessible products is unwavering,” said Carlos Abrams-Rivera, CEO of Kraft Heinz. “Our second quarter top-line results reflect this dedication, improving from the first quarter.” |
| The Company’s investments in product improvements and manufacturing capabilities are paying off, driving brand and product superiority that is resonating with consumers. “We are delivering value and driving improvement, underpinned by our Brand Growth System and our Go To Market model,” Abrams-Rivera added. |
| Looking ahead, Kraft Heinz is confident in its ability to drive long-term profitable growth. “We are excited about the future and the momentum we’re building across our business,” Abrams-Rivera said. “We are generating strong cash flow, maintaining our target Net Leverage ratio, and returning capital to stockholders, providing us with solid financial flexibility.” |
| Q2 2025 Financial Summary |
- Net sales decreased 1.9 per cent versus the year-ago period to $6.4 billion, including a 0.1 percentage point favourable impact from foreign currency. Organic Net Sales(1) decreased 2.0 per cent versus the prior year period. Price increased 0.7 percentage points versus the prior year period, with increases in each reportable segment that were largely driven by higher pricing that was taken in certain categories to mitigate higher input costs, primarily in coffee. Volume/mix declined 2.7 percentage points versus the prior year period, with declines in the North America and International Developed Markets segments, partially offset by volume/mix growth in the Emerging Markets segment. Unfavourable volume/mix was primarily driven by declines in cold cuts, coffee, Lunchables, frozen snacks, and powdered beverages.
|
- Operating Income decreased 1,627.6 per cent versus the year-ago period to a loss of $8.0 billion, primarily driven by non-cash impairment losses of $9.3 billion in the current year. This impairment charge was primarily driven by a sustained decline in our share price and market capitalisation. Adjusted Operating Income(1) decreased 7.5 per cent versus the year-ago period to $1.3 billion, primarily driven by increased commodity cost inflation, which more than offset our efficiency initiatives, and unfavourable volume/mix. These impacts were partially offset by higher pricing and decreased selling, general and administrative expenses, primarily due to lower advertising, and the favourable impact from foreign currency (0.2 pp).
|
- Diluted EPS decreased 8,350.0 per cent versus the prior year period to $(6.60), primarily driven by non-cash impairment losses in the current year. Adjusted EPS(1) was $0.69, down 11.5 per cent versus the prior year period, primarily driven by lower Adjusted Operating Income and higher taxes on adjusted earnings, partially offset by fewer shares outstanding.
|
- Net cash provided by/(used for) operating activities was $1.9 billion, up 12.6 per cent versus the year-ago period. This increase was primarily driven by favourable improvements in working capital, predominantly within accounts payable, as well as lower cash outflows from variable compensation in the 2025 period compared to the 2024 period. These impacts were partially offset by lower Adjusted Operating Income. Free Cash Flow(1) was $1.5 billion, up 28.5 per cent versus the prior year period, driven by the same net cash provided by/(used for) operating activities discussed above and a decrease in capital expenditures in the current year.
|
- Capital Return: Year to date, the Company paid $951 million in cash dividends and repurchased $435 million of common stock. Of the $435 million in share repurchases, approximately $400 million were repurchased under the Company’s publicly announced share repurchase program. As of June 28, 2025, the Company had remaining authorisation to repurchase approximately $1.5 billion of common stock under the publicly announced share repurchase program.
|
| Strategic Transactions |
| As announced in May, Kraft Heinz has been evaluating potential strategic transactions to unlock long-term shareholder value. The Company is actively progressing with its evaluation, which includes a rigorous review of a broad range of options. It remains laser-focused on driving profitable long-term growth and value creation. |
| There can be no assurance that the Company’s assessment process will result in any transaction, or any assurance as to its outcome or timing. The Company has not set a timetable for completion of this process and does not intend to make any further announcements regarding the process unless and until it determines that further disclosure is appropriate or necessary. |
| Outlook |
| For fiscal year 2025, the Company is reaffirming its outlook. The Company continues to expect: |
- Organic Net Sales(1)(2) down 1.5 to down 3.5 per cent versus the prior year.
|
- Constant Currency Adjusted Operating Income(1)(2) down 5 per cent to down 10 per cent versus the prior year. This includes the impact of lapping lower variable compensation in 2024, which is an approximate 150 basis point headwind. This also contemplates an Adjusted Gross Profit Margin (1)(2) that is now expected to be at the lower end of down 25 to down 75 basis points versus the prior year.
|
- Adjusted EPS(1)(2) in the range of $2.51 to $2.67. The Company continues to expect an effective tax rate on Adjusted EPS to be approximately 2 per cent, which reflects an approximate 0.23 cent headwind year-over-year. This increase in the effective tax rate is primarily driven by the impact of several countries enacting the global minimum tax regulations. It is partially offset by the annual go-forward benefit related to the transfer of certain business operations completed in the fourth quarter of 2024. Additionally, the Company continues to expect interest expense to be approximately $960 million and other expense/(income) to be approximately ($230) million for the full year. This guidance does not reflect any impact from future potential share repurchases.
|
- Free Cash Flow(1)(2) flat versus the prior year, with Free Cash Flow Conversion (1)(2) of at least 95 per cent. This is driven by working capital efficiencies and lower cash outflows for variable compensation, partially offset by a higher cash tax, primarily driven by the impact of several countries enacting the global minimum tax regulations.
|
| For the full document, click the link below |
| The Kraft Heinz Company |
| Stay ahead of the curve! Subscribe to InsidEntity for daily updates on all your favourite companies. |
