Skip to content
AnalystLens

Kraft Heinz Annual Report, Year Ended Dec 30, 2023

Filing Date
Filed February 15, 2024
Period End
December 30, 2023
Security
KHC
One revenue dollarkept$0.11
In the record · 2016–202610-K1110-Q348-K161

KHC filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 161 current reports (8-K) between 2016 and 2026.

  1. Impairment8-K · Feb ’19Feb ’19
  2. Material agreement8-K · Oct ’20Oct ’20
  3. Leadership change8-K · Dec ’22Dec ’22
  4. Leadership change8-K · Nov ’26Nov ’26

01—Abstract

Summary

Summary of the 10-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.

The Kraft Heinz Company (Nasdaq: KHC) reported 2023 net sales of $26.64 billiona, up 0.6% from $26.49 billion in 2022, with Organic Net Sales up 3.4% to $26.77 billion, primarily driven by higher pricing (8.9 pp) which more than offset unfavorable volume/mix (5.5 pp).

Operating income rose 25.8% to $4.57 billionb and net income rose 20.2% to $2.85 billion (net income attributable to common shareholders of $2.86 billion was not separately described as a percentage beyond the 20.8% change in the summary table). Diluted EPS increased 20.9% to $2.31, and Adjusted EPS increased 7.2% to $2.98. Adjusted EBITDA rose 5.1% to $6.31 billion.

The increases were driven by higher pricing and efficiency gains, partially offset by higher commodity and supply chain costs, unfavorable volume/mix, and higher SG&A, particularly advertising. Lower non-cash impairment losses in 2023 ($662 millionc total versus $999 million in 2022) also contributed to the improvement. Cash generation improved, with net cash provided by operating activities of $3.98 billion versus $2.47 billion in 2022, and capital expenditures of $1.01 billion.

The company paid $1.97 billiond in dividends and repurchased $455 million of common stock, and it authorized a new share repurchase program of up to $3.0 billion through December 26, 2026, with approximately $2.7 billion remaining at year end. Long-term debt, including the current portion, was $20.0 billion at December 30, 2023, and the company stated it was in compliance with all financial covenants. Credit ratings were BBB (S&P and Fitch) and Baa2 (Moody's), all with stable outlooks.

The filing also highlights risks. Goodwill impairment losses of $510 million and intangible asset impairment losses of $152 million were recorded in 2023, and the company identified a number of reporting units and brands with limited excess fair value that remain at heightened risk of future impairment. The company is also contesting IRS transfer pricing Notices of Proposed Adjustment for 2018 and 2019, which propose approximately $200 million and $210 million in additional U.S. federal tax excluding interest, plus penalties of approximately $85 million for each year.

Berkshire Hathaway owns approximately 26.7% of common stock. The company plans to split its International segment into three operating segments in 2024, with two reportable segments effective in the first quarter of 2024.

02—Key points

Key Highlights

  1. Net sales of $26.64 billion, up 0.6%; Organic Net Sales up 3.4%, driven by pricing of 8.9 percentage points, offset by volume/mix of -5.5 percentage points.
  2. Operating income of $4.57 billion, up 25.8%; net income of $2.85 billion, up 20.2%; diluted EPS of $2.31, up 20.9%.
  3. Adjusted EBITDA of $6.31 billion, up 5.1%; Adjusted EPS of $2.98, up 7.2%.
  4. Net cash provided by operating activities of $3.98 billion, compared with $2.47 billion in 2022; capital expenditures of $1.01 billion.
  5. Goodwill impairment losses of $510 million and intangible asset impairment losses of $152 million in 2023, compared with $444 million and $469 million in 2022.
  6. New $3.0 billion share repurchase authorization through December 26, 2026, with approximately $2.7 billion remaining; $1.97 billion paid in dividends.
  7. Pending IRS transfer pricing NOPAs for 2018 and 2019 propose approximately $200 million and $210 million in additional U.S. federal tax, plus penalties of approximately $85 million each, which the company is contesting.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2023, Kraft Heinz kept $0.11.

  1. Revenue$26.64B100.0%
  2. Cost of revenue−$17.71B66.5%
  3. Gross profit$8.93B33.5%
  4. Operating costs−$4.35B16.3%
  5. Operating income$4.57B17.2%
  6. Interest, other & tax−$1.72B6.4%
  7. Net income$2.85B10.7%
Computed from 10-KFY2023filed February 15, 2024Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2023 revenue went

$26.64B
  • Cost of revenue: $17.71B, 66% of revenue
  • SG&A: $4.35B, 16% of revenue
  • Net income: $2.85B, 11% of revenue
  • R&D: $147.0M, 0.6% of revenue
  • Interest, other & tax: $1.72B, 6.4% of revenue

Kept 11% as net incomeR&D $147.0M · 0.6%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2023filed February 15, 2024
Revenue$26.64B33.5% Gross MarginNet Income$2.85B10.7% Net MarginEPS (Diluted)$2.31Total Assets$90.34BCash & Equivalents$1.40BFree Cash Flow$2.96B

Financial Statements

FY2023 against FY2022

Line itemFY2023FY2022Change
Revenue$26.64B$26.48B+0.6%
Cost of Revenue$17.71B$18.36B−3.5%
Gross Profit$8.93B$8.12B+9.9%
R&D Expenses$147.00M$127.00M+15.7%
SG&A Expenses$4.35B$4.49B−3.0%
Operating Income$4.57B$3.63B+25.8%
Interest Expense$912.00M$921.00M−1.0%
Net Income$2.85B$2.36B+20.8%
EPS (Basic)$2.33$1.93+20.7%
EPS (Diluted)$2.31$1.91+20.9%
Shares Outstanding (Basic)1.23B1.23B+0.1%
Shares Outstanding (Diluted)1.24B1.24B0.0%

05—Questions

Frequently Asked Questions

  1. How did Kraft Heinz perform financially in 2023?

    Net sales rose 0.6% to $26.64 billion, while Organic Net Sales rose 3.4% to $26.77 billion on higher pricing that more than offset lower volume/mix. Operating income increased 25.8% to $4.57 billion, net income increased 20.2% to $2.85 billion, and diluted EPS increased 20.9% to $2.31.

  2. What drove the increase in operating income?

    The filing attributes the increase primarily to higher pricing, efficiency gains, lower non-cash impairment losses in 2023, and the impact of the securities class action lawsuit in the prior-year period. These offset higher commodity costs, supply chain inflation, unfavorable volume/mix, and higher SG&A, particularly advertising.

  3. What is the company's capital return and balance sheet position?

    Kraft Heinz paid $1.97 billion in dividends and repurchased $455 million of common stock in 2023. It authorized a new $3.0 billion share repurchase program through December 26, 2026, with about $2.7 billion remaining. Long-term debt including the current portion was $20.0 billion at year end, and the company reported compliance with all financial covenants.

  4. What are the main risks flagged in the filing?

    Key risks include goodwill and indefinite-lived intangible asset impairments, since several reporting units and brands have limited excess fair value; the outcome of IRS transfer pricing NOPAs for 2018 and 2019; commodity and input cost volatility; competition from private label products; and Berkshire Hathaway's approximately 26.7% ownership stake.

  5. Will the company's reporting structure change?

    Yes. Kraft Heinz expects to divide its International segment into three operating segments (International Developed Markets, WEEM, and AEM), with two reportable segments expected from the first quarter of 2024: North America and International Developed Markets, with WEEM and AEM combined as Emerging Markets.

06—Continue

← View all 10-K filings