Kraft Heinz(US:KHC)2025-10-29 11:01Financial Performance - Net sales decreased 2.3% year-over-year to $6.2 billion, with Organic Net Sales down 2.5%[5] - Gross profit margin decreased 230 basis points to 31.9%, while Adjusted Gross Profit Margin decreased 200 basis points to 32.3%[5] - Operating income was $1.0 billion, with Adjusted Operating Income down 16.9% to $1.1 billion[5] - For the three months ended September 27, 2025, net sales were $6,237 million, a decrease of 2.3% compared to $6,383 million for the same period in 2024[33] - Gross profit for the three months ended September 27, 2025, was $1,990 million, down from $2,186 million in the prior year, reflecting a gross profit margin decline[33] - The company reported an operating income of $1,025 million for the three months ended September 27, 2025, compared to an operating loss of $101 million in the same period last year[33] - Net income attributable to common shareholders for the three months ended September 27, 2025, was $615 million, a significant recovery from a net loss of $290 million in the prior year[33] - Adjusted Operating Income for Kraft Heinz was $1,106 million for the three months ended September 27, 2025, compared to $1,330 million for the same period in 2024, reflecting a decline of 16.9%[41] - For the nine months ended September 27, 2025, Kraft Heinz reported net sales of $18,588 million, down 3.5% from $19,270 million in the same period of 2024[39] - Kraft Heinz's overall adjusted operating income for the nine months ended September 27, 2025, was $3,581 million, down from $3,975 million in the prior year[46] Cash Flow and Shareholder Returns - Year-to-date net cash provided by operating activities was $3.1 billion, up 10.4%, and Free Cash Flow was $2.5 billion, up 23.3%[5] - The company returned $1.8 billion to stockholders year-to-date, including $1.4 billion in cash dividends and $435 million in share repurchases[9] - Free Cash Flow Conversion is expected to be at least 100%, improved from the previous expectation of at least 95%[18] - Free cash flow increased to $2.490 billion, up from $2.019 billion year-over-year, representing a growth of 23.3%[71] - The company reported a free cash flow conversion rate of 109%, up from 75% in the prior year[71] - The company repurchased $435 million in common stock during the period, compared to $538 million in the same period last year[69] Future Outlook - The company plans to separate into two independent publicly traded companies in the second half of 2026[10] - For fiscal year 2025, the company expects Organic Net Sales to decline 3.0% to 3.5%[14] - Adjusted EPS is projected to be in the range of $2.50 to $2.57, down from the previous expectation of $2.51 to $2.67[18] - The company anticipates a Constant Currency Adjusted Operating Income decline of 10% to 12% versus the prior year[14] Impairment and Restructuring - The company experienced goodwill impairment losses of $35 million for the three months ended September 27, 2025, compared to $707 million in the same period last year[33] - The company experienced a significant impairment loss of $9,301 million for the nine months ended September 27, 2025[41] - Impairment losses totaled $35 million, while separation costs were $17 million, both affecting the overall financial performance[48] - The financial results indicate a focus on restructuring and managing impairment losses as part of the company's strategy[50] Market Performance - North America net sales decreased by 3.8% year-over-year, totaling $4,641 million for the same period[36] - Emerging Markets showed a year-over-year growth of 3.8%, with net sales reaching $701 million for the three months ended September 27, 2025[36] - Kraft Heinz's International Developed Markets reported a slight decline in net sales of 0.5% year-over-year, totaling $2,609 million for the nine months ended September 27, 2025[39] Earnings and Taxation - Basic earnings per share for the three months ended September 27, 2025, were $0.52, recovering from a loss of $0.24 per share in the prior year[33] - Adjusted EPS for the three months ended September 27, 2025, was $0.61, down from $0.75 in the same period last year, reflecting a decrease of $0.14[59] - For the nine months ended September 27, 2025, the adjusted EPS was $1.92, down from $2.22 in the prior year, a decrease of $0.30[62] - The effective tax rate impact on adjusted EPS for the three months ended September 27, 2025, was a decrease of $0.02[59] Asset and Liability Management - Total assets decreased from $88.287 billion to $81.695 billion, a decline of approximately 7.2%[66] - Total current liabilities increased from $7.253 billion to $8.863 billion, a rise of approximately 22.1%[66] - Total shareholders' equity decreased from $49.185 billion to $41.450 billion, a decline of approximately 15.7%[66] - Cash and cash equivalents rose to $2.251 billion, an increase of $765 million compared to the beginning of the period[69] Non-GAAP Measures - Adjusted EBITDA and other non-GAAP measures are used to provide a clearer view of the company's operational performance, excluding certain impacts like restructuring costs[24][25] - The company continues to emphasize the importance of adjusted results for a clearer view of operational performance amidst significant GAAP fluctuations[50]