Kraft Heinz Reports Third Quarter 2025 Results; Updates Full Year 2025 Outlook

By: Alexis Rubinstein, Managing Editor - Coffee Network

Wed, 29 Oct 2025, 15:26

CoffeeNetwork (New York) – Kraft Heinz today reported financial results for the third quarter of 2025.

“Our third quarter results reflect a modest year-over-year improvement in our top-line performance relative to the first half of the year,” said Carlos Abrams-Rivera, CEO of Kraft Heinz. “While the operating environment remains challenging, we’re seeing improvement driven in part by targeted investments we’re making to deliver superior and affordable products to our consumers.”

“Informed by insights from our Brand Growth System, we’re making strategic investments in marketing and R&D to strengthen our portfolio through product enhancements, more effective communication with consumers, and stronger execution. We’re funding these investments through our best-in-class levels of productivity, while at the same time generating strong cash flow, maintaining our target Net Leverage ratio, and returning capital to stockholders.”

Abrams-Rivera continued, “Looking ahead, we are on track to separate into two companies in the second half of 2026. I’m confident the separation will allow each business to better focus resources, improve execution, reduce complexity, and drive further efficiencies. As we navigate this transition, we remain focused on driving performance within our current business, and ultimately positioning both companies for long-term success.”

Net sales decreased 2.3 percent versus the year-ago period to $6.2 billion, including a 0.2 percentage point favorable impact from foreign currency. Organic Net Sales(1) decreased 2.5 percent versus the prior year period. Price increased 1.0 percentage point versus the prior year period, with increases in each reportable segment that were largely driven by higher pricing that was taken in certain categories to mitigate higher input costs, primarily in coffee. Volume/mix declined 3.5 percentage points versus the prior year period, with declines in the North America and International Developed Markets segments, partially offset by volume/mix growth in the Emerging Markets segment. Unfavorable volume/mix was primarily driven by declines in coffee, cold cuts, frozen snacks, certain condiments, and Indonesia.

Operating Income increased 1,114.9 percent versus the year-ago period to $1.0 billion, primarily driven by non-cash impairment losses of $1.4 billion in the prior year. Adjusted Operating Income(1) decreased 16.9 percent versus the year-ago period to $1.1 billion, primarily driven by inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, and increased selling, general and administrative expenses, primarily due to increased advertising. These impacts were partially offset by higher pricing and a favorable impact from foreign currency (0.1 pp).

Diluted EPS increased 316.7 percent versus the prior year period to $0.52, primarily driven by non-cash impairment losses in the prior year. Adjusted EPS was $0.61, down 18.7 percent versus the prior year period, primarily driven by lower Adjusted Operating Income, higher taxes on adjusted earnings largely due to changes made to our corporate entity structure in December 2024, and higher interest expense. These factors were partially offset by favorable changes in other expense/(income) and fewer shares outstanding.

Net cash provided by/(used for) operating activities was $3.1 billion, up 10.4 percent versus the year-ago period. This increase was primarily driven by improvements in working capital, predominantly within inventory and accounts payable, as well as lower cash outflows from variable compensation in the 2025 period compared to the 2024 period. These impacts were partially offset by lower Adjusted Operating Income. Free Cash Flow was $2.5 billion, up 23.3 percent versus the prior year period, driven by the same net cash provided by/(used for) operating activities discussed above and a decrease in capital expenditures in the current year.

Capital Return: Year to date, the Company paid $1.4 billion in cash dividends and repurchased $435 million of common stock. Of the $435 million in share repurchases, approximately $400 million were repurchased under the Company’s publicly announced share repurchase program. The Company has remaining authorization to repurchase approximately $1.5 billion of common stock under the publicly announced share repurchase program as of Sept. 27, 2025.

Outlook

For fiscal year 2025, the Company is updating its outlook. The Company now expects:

Organic Net Sales down 3.0 to down 3.5 percent versus the prior year, compared to the previous expectation of down 1.5 to down 3.5 percent. This contemplates slower growth in Emerging Markets, driven by continued declines in Indonesia and pressure in U.S. Retail.

Constant Currency Adjusted Operating Income down 10 to down 12 percent versus the prior year, compared to the previous expectation of down 5 to down 10 percent. This also contemplates an Adjusted Gross Profit Margin that is now expected to be down approximately 100 basis points versus the prior year.

Adjusted EPS in the range of $2.50 to $2.57, compared to the previous expected range of $2.51 to $2.67. The Company continues to expect an effective tax rate on Adjusted EPS to be approximately 26 percent, which reflects an approximate $0.23 headwind year over year. This increase in the effective tax rate is primarily driven by the impact of several countries enacting global minimum tax regulations. It is partially offset by the annual go-forward benefit related to the transfer of certain business operations completed in the fourth quarter of 2024. Additionally, the Company expects interest expense to be approximately $950 million and other expense/(income) to be approximately ($250) million for the full year.

Free Cash Flow to increase versus the prior year, with Free Cash Flow Conversion of at least 100 percent, compared to the previous expectation of at least 95 percent. This is driven by working capital efficiencies and lower cash outflows for variable compensation, partially offset by a higher cash tax primarily driven by the impact of several countries enacting global minimum tax regulations.

Alexis Rubinstein

Coffee

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