01—Abstract
Summary
Summary of the 8-K filed July 30, 2025. Cited figures are marked; the original filing is the authoritative source.
The Kraft Heinz Company reported results for the first quarter ended June 28, 2025 in a press release furnished as Exhibit 99.1 to this Form 8-K, dated July 30, 2025.
Net sales were $6.35 billiona, down 1.9% from the prior year, while Organic Net Sales decreased 2.0%. Volume/mix declined 2.7 percentage points, partially offset by 0.7 percentage points of price increases. The company reported an operating loss of $7.97 billion for the quarter, driven by $9.27 billion of impairment losses, and a diluted loss per share of $(6.60).
Excluding these items, Adjusted Operating Income was $1.28 billionb, down 7.5%, and Adjusted EPS was $0.69, down 11.5%. Management cited commodity cost inflation and unfavorable volume/mix as the main drivers of lower Adjusted Operating Income. Cash generation improved.
Year-to-date net cash provided by operating activities was $1.93 billionc, up 12.6%, and Free Cash Flow was $1.50 billion, up 28.5%, with Free Cash Flow Conversion at 96%. The company paid $951 million in dividends and repurchased $435 million of common stock year to date, and had about $1.5 billion remaining under its share repurchase authorization. The company reaffirmed its fiscal 2025 outlook, including Organic Net Sales down 1.5% to 3.5%, Adjusted EPS of $2.51 to $2.67, and Free Cash Flow flat versus the prior year.
It noted that the Adjusted Gross Profit Margin is now expected at the lower end of the range of down 25 to 75 basis points. The company also said it is actively evaluating strategic transactions to unlock long-term shareholder value, following an announcement made in May. It stated there is no assurance that the review will result in any transaction and that it has not set a timetable for completion.
02—Key points
Key Highlights
- Net sales of $6.35 billion decreased 1.9% year over year; Organic Net Sales decreased 2.0%, with volume/mix down 2.7 percentage points and price up 0.7 percentage points.
- Operating loss of $7.97 billion, driven by $9.27 billion of non-cash impairment losses; diluted EPS was $(6.60) versus $0.08 in the prior-year quarter.
- Adjusted Operating Income was $1.28 billion, down 7.5%, as commodity cost inflation and unfavorable volume/mix outweighed efficiency initiatives and higher pricing.
- Adjusted EPS was $0.69, down 11.5% from $0.78, primarily reflecting lower Adjusted Operating Income and higher taxes on adjusted earnings.
- Year-to-date operating cash flow was $1.93 billion, up 12.6%, and Free Cash Flow was $1.50 billion, up 28.5%, with Free Cash Flow Conversion of 96%.
- Fiscal 2025 outlook reaffirmed, including Adjusted EPS of $2.51 to $2.67 and Organic Net Sales down 1.5% to 3.5%; the Adjusted Gross Profit Margin decline is now expected at the lower end of down 25 to 75 basis points.
- The company is actively evaluating strategic transactions, with no assurance of outcome or timing and no set timetable for completion.
03—Questions
Frequently Asked Questions
Why did Kraft Heinz report an operating loss for the quarter?
The operating loss of $7.97 billion was primarily driven by non-cash impairment losses of $9.27 billion, which the company said were mainly due to a sustained decline in its share price and market capitalization. Excluding impairments and other items affecting comparability, Adjusted Operating Income was $1.28 billion.
What drove the decline in underlying profitability?
Adjusted Operating Income decreased 7.5% mainly because of increased commodity cost inflation, which more than offset efficiency initiatives, and unfavorable volume/mix. Higher pricing and lower SG&A expenses, primarily due to lower advertising, partially offset these headwinds.
Which products drove the unfavorable volume/mix?
The company said unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, Lunchables, frozen snacks, and powdered beverages. Volume/mix growth in the Emerging Markets segment partially offset the declines.
How is the company returning capital and generating cash?
Year to date, Kraft Heinz paid $951 million in cash dividends and repurchased $435 million of common stock, with about $1.5 billion remaining under its publicly announced repurchase authorization. Free Cash Flow was $1.50 billion, supported by working capital improvements, mainly in accounts payable, and lower variable compensation outflows.
What is the company's outlook for fiscal 2025?
Kraft Heinz reaffirmed its fiscal 2025 outlook, expecting Organic Net Sales down 1.5% to 3.5%, Adjusted EPS of $2.51 to $2.67, and Free Cash Flow flat versus the prior year with Free Cash Flow Conversion of at least 95%. It said the Adjusted Gross Profit Margin decline is now expected at the lower end of down 25 to 75 basis points.
04—Continue