Kraft Heinz(KHC) - 2025 Q4 - Annual Results

Financial Performance - Net sales for the full year 2025 decreased by 3.5% to $24.9 billion, with organic net sales down 3.4%[7] - Operating income for the full year 2025 was a loss of $4.7 billion, primarily due to non-cash impairment losses of $9.3 billion[3] - Diluted EPS for the full year 2025 was $(4.93), down 318.1% compared to the prior year[7] - Gross profit margin for the full year 2025 decreased by 140 basis points to 33.3%[3] - The company reported a net loss of $5,848 million for the year ended December 27, 2025, compared to a net income of $2,746 million in 2024[32] - Adjusted EPS for the year ended December 27, 2025, decreased to $2.60 from $3.06, a decline of 15.0%[59] - The company experienced a significant impairment loss of $9,306 million in the previous year, impacting overall financial performance[40] - The company incurred goodwill impairment losses of $6,734 million for the year ended December 27, 2025, significantly higher than $1,638 million in 2024[32] - Adjusted operating income for the year was $4,745 million, down 11.5% from $5,360 million in the prior year[43] - The company reported a net loss of $5,848 million for the year ended December 27, 2025, primarily due to significant impairment losses[49] Cash Flow and Assets - Free cash flow for the full year 2025 was $3.7 billion, up 15.9% from the previous year[10] - Net cash provided by operating activities for the full year 2025 was $4.5 billion, an increase of 6.6%[10] - Free Cash Flow for the year ended December 27, 2025, was $3,661 million, up from $3,160 million, representing a 15.8% increase[65] - The company reported a Free Cash Flow Conversion rate of 119% for the year ended December 27, 2025, compared to 85% in the previous year[65] - Total current assets increased to $10,127 million from $7,655 million, a growth of 32.2%[62] - Cash and cash equivalents increased to $2,615 million from $1,334 million, a rise of 96.0%[62] Future Outlook - For fiscal year 2026, the company expects organic net sales to decline between 1.5% and 3.5%[13] - Adjusted EPS for fiscal year 2026 is projected to be in the range of $1.98 to $2.10[13] - The company plans to focus resources on growth and has paused work related to separation[4] - The company is currently evaluating the separation into two independent publicly traded companies, which may impact future financial performance[16] Market and Segment Performance - North America segment net sales decreased by 4.9% year-over-year, totaling $18,586 million[38] - Emerging markets showed a year-over-year growth of 1.8%, with net sales reaching $2,817 million[38] - The company noted a currency impact of $10 million on adjusted operating income for the year ended December 27, 2025[43] Earnings and Profitability - Basic earnings per share for the three months ended December 27, 2025, were $0.55, down from $1.77 in the same period of 2024[32] - The adjusted gross profit for the three months ended December 27, 2025, was $2,101 million, with net sales of $6,354 million, resulting in a margin of 33.1%[53] - The effective tax rate for the three months ended December 27, 2025, negatively impacted adjusted EPS by $0.03 compared to the previous year[55] - The company recognized a benefit of $2,239 million from certain significant discrete income tax items, which positively influenced net income[51] Risks and Challenges - The company faces various risks, including competitive pressures and changes in consumer demand, which may affect future performance[16] - The company emphasizes the importance of maintaining brand reputation and responding to consumer preferences to drive revenue growth[16]