01—Abstract
Summary
Summary of the 10-Q filed July 30, 2025. Cited figures are marked; the original filing is the authoritative source.
Kraft Heinz reported a sharply weaker second quarter ended June 28, 2025, driven by non-cash impairments.
Net sales fell 1.9% to $6.4 billiona for the quarter (Organic Net Sales down 2.0%), with unfavorable volume/mix (2.7 pp) more than offsetting higher pricing (0.7 pp). Operating income swung to a loss of $8.0 billion, versus income of $522 million a year earlier, as the company recorded $6.7 billion of goodwill impairment losses and $2.6 billion of intangible asset impairment losses after its interim test triggered by the sustained decline in share price and market capitalization. Net loss attributable to common shareholders was $7.8 billion, or $(6.60) per diluted share, compared with $102 million, or $0.08 per share, a year earlier.
Adjusted EPS, a non-GAAP measure excluding impairments and other items, decreased 11.5% to $0.69b, and Adjusted Operating Income decreased 7.5% to $1.3 billion. For the first half, net sales decreased 4.2% to $12.4 billion and Adjusted EPS decreased 10.9% to $1.31. Management cited increased commodity cost inflation, which more than offset efficiency initiatives, and unfavorable volume/mix, particularly in North America.
Emerging Markets was the bright spot, with Segment Adjusted Operating Income up 52.3% in the quarter. Goodwill fell to $22.2 billionc from $28.7 billion at year-end 2024, and the company warned that several reporting units and brands now have zero excess fair value and face a heightened risk of future impairments. On the balance sheet, cash and cash equivalents rose to $1.6 billion and the company held $997 million of marketable securities.
Total debt including the current portion was $21.2 billiond, and the company issued $1.6 billion of new notes in the first quarter. Dividends paid for the six months totaled $951 million, and a $0.40 quarterly dividend was declared for payment on September 26, 2025. The company also amended its $4.0 billion revolving credit facility on July 8, 2025, extending maturity to 2030 and lowering the minimum shareholders' equity covenant from $35 billion to $25 billion.
02—Key points
Key Highlights
- Q2 2025 operating loss of $8.0 billion, versus operating income of $522 million in Q2 2024, driven by $6.7 billion of goodwill impairment losses and $2.6 billion of intangible asset impairment losses
- Q2 2025 diluted EPS of $(6.60) versus $0.08 a year earlier; Adjusted EPS of $0.69, down 11.5% from $0.78
- Net sales of $6.4 billion for Q2, down 1.9%; Organic Net Sales down 2.0%, with volume/mix down 2.7 pp and pricing up 0.7 pp
- Emerging Markets Segment Adjusted Operating Income rose 52.3% to $100 million in Q2, while North America fell 12.5% to $1.2 billion
- Goodwill declined to $22.2 billion from $28.7 billion at year-end 2024; reporting units including TMS, AFH, WE, MC and CNAC were written down to zero excess fair value and face heightened future impairment risk
- Cash and cash equivalents of $1.6 billion, plus $997 million of marketable securities; issued $1.6 billion of senior notes in the first half of 2025
- Quarterly dividend of $0.40 per share declared for payment September 26, 2025; $1.5 billion remained under the share repurchase authorization at June 28, 2025
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2025, Kraft Heinz lost $1.23.
- Revenue$6.35B100.0%
- Cost of revenue−$4.17B65.6%
- Gross profit$2.18B34.4%
- Operating costs−$10.16B159.9%
- Operating income−$7.97B125.5%
- Interest, other & tax$150.0M2.4%
- Net income−$7.82B123.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 30, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $6.35B$6.48B | −1.9% |
| Cost of Revenue | $4.17B$4.18B | −0.3% |
| Gross Profit | $2.18B$2.29B | −4.8% |
| SG&A Expenses | $10.16B$1.77B | +473.2% |
| Operating Income | -$7.97B$522.00M | −1627.6% |
| Interest Expense | $240.00M$229.00M | +4.8% |
| Net Income | -$7.82B$102.00M | −7770.6% |
| EPS (Basic) | $-6.60$0.08 | −8350.0% |
| EPS (Diluted) | $-6.60$0.08 | −8350.0% |
| Shares Outstanding (Basic) | 1.19B1.21B | −2.2% |
| Shares Outstanding (Diluted) | 1.19B1.22B | −2.5% |
05—Questions
Frequently Asked Questions
Why did Kraft Heinz report such a large net loss in the second quarter of 2025?
The net loss of $7.8 billion was driven primarily by non-cash impairment charges. Following a sustained decline in share price and market capitalization, the company performed an interim test and recognized $6.7 billion of goodwill impairment losses and $2.6 billion of intangible asset impairment losses, mainly tied to the TMS, MC, CNAC, AFH, WE reporting units and the Kraft, Velveeta, Lunchables, and Maxwell House brands. Excluding impairments and other items, Adjusted EPS was $0.69.
How did underlying sales and profitability trend?
Organic Net Sales declined 2.0% in the quarter and 3.3% in the first half, primarily due to unfavorable volume/mix, which more than offset higher pricing. Adjusted Operating Income fell 7.5% to $1.3 billion in the quarter, driven by increased commodity cost inflation, which more than offset efficiency initiatives, and unfavorable volume/mix. Emerging Markets was the exception, with higher pricing and favorable volume/mix.
Are there further impairment risks for investors to watch?
Yes. The filing states that reporting units and brands written down to zero excess fair value face a heightened risk of future impairments if assumptions change. It also notes that the reorganization of North America reporting units effective the first day of the third quarter of 2025 will require a pre-reorganization impairment test and a post-reorganization test in conjunction with the annual third-quarter test, so future charges may occur.
How is the company's debt and liquidity position?
Total debt including the current portion was $21.2 billion at June 28, 2025, compared with $19.9 billion at year-end 2024. Cash and cash equivalents were $1.6 billion, and the $4.0 billion Senior Credit Facility was undrawn. The company had approximately $1.9 billion of senior notes maturing in June 2026 and was in compliance with all financial covenants. The July 8, 2025 amendment extended the facility to 2030 and reduced the minimum shareholders' equity covenant from $35 billion to $25 billion.
What is the outlook for tariffs and cost inflation?
Management said inflationary pressures in the first half of 2025 were at a slightly elevated rate compared with 2024. The company expects proposed trade policy changes, if enacted as outlined, to primarily affect a subset of North America, notably the Hydration and Coffee platforms, through higher cost of products sold. Tariff actions had not had a significant impact to date, but the company said they may have a material impact in the future.
06—Continue