01—Abstract
Summary
Summary of the 10-Q filed October 29, 2025. Cited figures are marked; the original filing is the authoritative source.
The Kraft Heinz Company's third-quarter 2025 Form 10-Q (quarter ended September 27, 2025) shows net sales of $6.24 billiona, down 2.3% from $6.38 billion a year earlier, with Organic Net Sales down 2.5% driven by unfavorable volume/mix (3.5 pp) that more than offset higher pricing (1.0 pp).
Reported results swung to operating income of $1.03 billionb and net income of $613 million, versus an operating loss of $101 million and net loss of $290 million in the prior-year quarter, mainly because of much lower non-cash impairment losses. For the nine months, the company recorded a net loss of $6.50 billion after goodwill impairment losses of $6.73 billion and intangible asset impairment losses of $2.57 billion, while Adjusted Operating Income fell 9.9% to $3.58 billion and Adjusted EPS fell 13.5% to $1.92. Management attributes the margin pressure to commodity and manufacturing inflation outpacing efficiency gains, along with tariff-related cost increases and higher advertising expense.
The company announced on September 2, 2025 a plan to separate into two publicly traded companies through a tax-free spin-off, expected to be completed in the second half of 2026. The two resulting companies are referred to as "Global Taste Elevation Co." and "North American Grocery Co." The separation remains subject to final board approval, favorable tax opinions, and SEC filings, and the company incurred $17 millionc of separation costs in the quarter. Liquidity remains solid, with cash and cash equivalents of $2.11 billion, marketable securities of $1.02 billion, and total debt (current plus long-term) of $21.2 billion at a carrying value.
Operating cash flow was $3.09 billiond for the nine months, and the company paid $1.42 billion in dividends. The filing also notes that the company now maintains six reporting units with goodwill of $22.2 billion and brands with $34.1 billion of indefinite-lived intangibles, several of which have limited headroom above carrying value, so further impairments remain a risk. The filing discloses an IRS transfer pricing matter covering 2018 through 2022, with proposed additional U.S. federal tax of roughly $200 million to $210 million per year, excluding interest and penalties, for which no reserve has been recorded because the company strongly disagrees with the IRS's positions.
02—Key points
Key Highlights
- Q3 2025 net sales of $6.24 billion, down 2.3% year over year; Organic Net Sales down 2.5%, with volume/mix down 3.5 pp partly offset by pricing up 1.0 pp.
- Q3 2025 operating income of $1.03 billion and net income of $613 million, compared with an operating loss of $101 million and net loss of $290 million in Q3 2024, largely reflecting $1.4 billion lower impairment losses.
- Nine-month 2025 net loss of $6.50 billion (diluted EPS of $(5.47)), driven by $6.73 billion of goodwill impairment losses and $2.57 billion of intangible asset impairment losses recorded in the second quarter.
- Adjusted Operating Income of $1.11 billion in Q3 2025 (down 16.9%) and $3.58 billion for nine months (down 9.9%); Adjusted EPS of $0.61 in Q3 (down 18.7%) and $1.92 for nine months (down 13.5%).
- Announced separation into two independent public companies via tax-free spin-off, expected in the second half of 2026; $17 million of separation costs recognized in the quarter.
- Italy infant and specialty food business sale to NewPrinces S.p.A. for about $140 million expected to close in Q1 2026, with a $44 million pre-tax loss on sale recognized.
- Remaining goodwill of $22.2 billion and brands of $34.1 billion carry limited headroom for several reporting units and brands, leaving them at heightened risk of future impairments.
- Cash and marketable securities totaled about $3.13 billion at September 27, 2025, with a $1.9 billion senior note maturity due June 2026 and a $4.0 billion undrawn revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Kraft Heinz kept $0.10.
- Revenue$6.24B100.0%
- Cost of revenue−$4.25B68.1%
- Gross profit$1.99B31.9%
- Operating costs−$965.0M15.5%
- Operating income$1.02B16.4%
- Interest, other & tax−$410.0M6.6%
- Net income$615.0M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed October 29, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $6.24B$6.38B | −2.3% |
| Cost of Revenue | $4.25B$4.20B | +1.2% |
| Gross Profit | $1.99B$2.19B | −9.0% |
| SG&A Expenses | $965.00M$2.29B | −57.8% |
| Operating Income | $1.02B-$101.00M | +1114.9% |
| Interest Expense | $240.00M$230.00M | +4.3% |
| Net Income | $615.00M-$290.00M | +312.1% |
| EPS (Basic) | $0.52$-0.24 | +316.7% |
| EPS (Diluted) | $0.52$-0.24 | +316.7% |
| Shares Outstanding (Basic) | 1.18B1.21B | −2.1% |
| Shares Outstanding (Diluted) | 1.19B1.21B | −2.0% |
05—Questions
Frequently Asked Questions
Why did Kraft Heinz report a large net loss for the first nine months of 2025 despite higher third-quarter profit?
The nine-month net loss of $6.50 billion was driven by non-cash impairment losses recorded in the second quarter of 2025, including $6.73 billion of goodwill impairments and $2.57 billion of intangible asset impairments. The company attributed these to the market's perceived risk of achieving future cash flow projections and, for certain brands, lower revenue and margin assumptions. Third-quarter results alone showed net income of $613 million because no impairments were recorded in that quarter beyond $35 million related to the Italy divestiture.
What is the status and expected timing of the planned separation?
On September 2, 2025, the company announced plans to split into two independent public companies through a tax-free spin-off, with the two companies referred to as Global Taste Elevation Co. and North American Grocery Co. The company currently expects completion in the second half of 2026. Completion depends on final Board approval, favorable tax opinions, and effective SEC filings, and the company cannot assure the timeline or that the separation will occur at all.
What drove the decline in Adjusted Operating Income?
Management cited inflationary pressures in commodity and manufacturing costs that outpaced efficiency initiatives, unfavorable volume/mix, and increased SG&A, primarily advertising expenses. In the third quarter, these unfavorable factors more than offset higher pricing. For the nine months, decreased SG&A from lower advertising and variable compensation partly offset the cost pressures.
What is the potential exposure from the IRS transfer pricing matter?
The IRS has proposed transfer pricing adjustments for 2018 through 2022 that could add U.S. federal income tax of roughly $200 million to $210 million per year, excluding interest, and penalties of about $85 million for each of 2018 and 2019. The company disagrees with the IRS positions and has recorded no reserve for the issue, though it states that the ultimate outcome is uncertain and could materially affect results and cash flows if additional taxes are owed.
How strong is the company's liquidity and debt position?
At September 27, 2025, the company held $2.11 billion of cash and cash equivalents and $1.02 billion of marketable securities. Total debt carrying value was $21.2 billion, with $1.9 billion of current portion. The $4.0 billion Senior Credit Facility was undrawn, and the facility's maturity was extended to July 8, 2030. The company said it was in compliance with all financial covenants.
06—Continue