01—Abstract
Summary
Summary of the 10-K filed February 13, 2025. Cited figures are marked; the original filing is the authoritative source.
The Kraft Heinz Company's 2024 fiscal year (ended December 28, 2024) saw net sales decline 3.0% to $25.8 billiona, with Organic Net Sales down 2.1% to $25.9 billion, driven primarily by unfavorable volume/mix (3.5 pp) that more than offset higher pricing (1.4 pp).
Reported operating income fell 63.2% to $1.7 billionb because of $3.7 billion in impairment losses, including $1.6 billion of goodwill impairments and $2.0 billion of intangible asset impairments, while Adjusted Operating Income rose 1.2% to $5.4 billion. Net income was $2.7 billion and diluted EPS was $2.26, compared with $2.31 in 2023; Adjusted EPS rose 2.7% to $3.06. The effective tax rate was a benefit of 220.5%, driven mainly by recognition of a $3.0 billion non-U.S. deferred tax asset from moving certain business operations to a Netherlands subsidiary, partly offset by a $0.6 billion valuation allowance.
Net cash from operating activities was $4.2 billionc, capital expenditures were $1.0 billion, and dividends paid totaled $1.9 billion. Long-term debt including the current portion was $19.9 billion at year end, and the company was in compliance with its financial covenants. Berkshire Hathaway owned approximately 27.2% of common stock, and the company had about $1.9 billion remaining under its $3.0 billion share repurchase authorization.
The filing also flags concentrated risk: Walmart represented about 21% of net sales, the company remains exposed to ongoing impairment risk for reporting units and brands with limited excess fair value, and an IRS examination of 2018 and 2019 transfer pricing carries proposed adjustments of roughly $200 milliond and $210 million in tax plus penalties. The company expects 2025 capital expenditures of about $1.0 billion and declared a $0.40 per share quarterly dividend for the first quarter of 2025.
02—Key points
Key Highlights
- Net sales were $25.8 billion, down 3.0%; Organic Net Sales were down 2.1%, with volume/mix (3.5 pp) more than offsetting pricing (1.4 pp).
- Operating income fell 63.2% to $1.7 billion, reflecting $3.7 billion of impairment losses ($1.6 billion goodwill and $2.0 billion intangible assets), while Adjusted Operating Income rose 1.2% to $5.4 billion.
- Diluted EPS was $2.26 versus $2.31 in 2023; Adjusted EPS increased 2.7% to $3.06.
- Income tax results included a $3.0 billion non-U.S. deferred tax asset from the Netherlands entity restructuring, producing an effective tax rate benefit of 220.5%.
- Operating cash flow was $4.2 billion and capital expenditures were $1.0 billion; dividends paid were $1.9 billion and share repurchases were $988 million.
- Long-term debt was $19.9 billion at year end; the company was in compliance with its financial covenants, and its senior debt is rated BBB by S&P and Fitch and Baa2 by Moody's.
- Walmart represented about 21% of net sales in 2024, and Berkshire Hathaway owned about 27.2% of common stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Kraft Heinz kept $0.11.
- Revenue$25.85B100.0%
- Cost of revenue−$16.88B65.3%
- Gross profit$8.97B34.7%
- Operating costs−$7.29B28.2%
- Operating income$1.68B6.5%
- Interest, other & tax$1.06B4.1%
- Net income$2.74B10.6%
Where FY2024 revenue went
$25.85B- Cost of revenue: $16.88B, 65% of revenue
- SG&A: $7.29B, 28% of revenue
- Operating income: $1.68B, 6.5% of revenue
- R&D: $150.0M, 0.6% of revenue
Kept 6.5% as operating incomeOperating income $1.68B · 6.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 13, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $25.85B$26.64B | −3.0% |
| Cost of Revenue | $16.88B$17.71B | −4.7% |
| Gross Profit | $8.97B$8.93B | +0.5% |
| R&D Expenses | $150.00M$147.00M | +2.0% |
| SG&A Expenses | $7.29B$4.35B | +67.3% |
| Operating Income | $1.68B$4.57B | −63.2% |
| Interest Expense | $912.00M$912.00M | 0.0% |
| Net Income | $2.74B$2.85B | −3.9% |
| EPS (Basic) | $2.27$2.33 | −2.6% |
| EPS (Diluted) | $2.26$2.31 | −2.2% |
| Shares Outstanding (Basic) | 1.21B1.23B | −1.4% |
| Shares Outstanding (Diluted) | 1.22B1.24B | −1.6% |
05—Questions
Frequently Asked Questions
Why did reported operating income fall so sharply in 2024?
Operating income fell 63.2% to $1.7 billion from $4.6 billion, primarily because impairment losses rose by $3.0 billion year over year. The filing records goodwill impairment losses of $1.6 billion and intangible asset impairment losses of $2.0 billion in 2024, including a $1.3 billion impairment on the Oscar Mayer brand and an $854 million goodwill impairment on the Meat & Cheese reporting unit. Excluding impairments and other special items, Adjusted Operating Income rose 1.2% to $5.4 billion.
Why was the 2024 effective tax rate a benefit rather than an expense?
The company recognized a $3.0 billion non-U.S. deferred tax asset after moving certain business operations to a wholly-owned Netherlands subsidiary. This was partly offset by a $0.6 billion valuation allowance against the Netherlands asset, a full valuation allowance against Brazil net deferred tax assets, and non-deductible goodwill impairments. The effective tax rate was a benefit of 220.5%, compared with an expense of 21.7% in 2023.
What risks does the filing highlight regarding the IRS and tax matters?
The IRS is examining the company's 2018 through 2022 income taxes. Two Notices of Proposed Adjustment relate to transfer pricing with foreign subsidiaries and propose additional U.S. federal tax of approximately $200 million for 2018 and $210 million for 2019, excluding interest, plus penalties of approximately $85 million for each year. The company strongly disagrees, has recorded no reserves for this issue, and intends to contest the positions vigorously.
How much capital is the company returning to shareholders, and how much authorization remains?
The company paid $1.9 billion in dividends in 2024 and repurchased $988 million of common stock in cash flow terms. In the first quarter of 2025 the Board declared a $0.40 per share dividend. The $3.0 billion share repurchase program authorized in November 2023 had approximately $1.9 billion remaining as of December 28, 2024, and runs through December 26, 2026.
What does the company's largest-customer concentration mean for investors?
Walmart Inc. represented approximately 21% of net sales in 2024, 2023, and 2022, and both reportable segments sell to Walmart. The five largest customers accounted for approximately 46% of North America segment net sales. The filing notes that retail consolidation and retailer purchasing power could materially affect product sales, pricing, and financial results.
06—Continue