Financial Data and Key Metrics Changes - Organic net sales declined 2% year-over-year, an improvement from a 4.7% decline in the first quarter [7][33] - Free cash flow generated year-to-date was $1,500,000,000, nearly 30% above prior year levels [8][40] - Adjusted operating income declined 7.5%, with a margin decrease of 120 basis points [35] - Adjusted EPS declined 11.5% to $0.09 compared to 2024 [40] Business Line Data and Key Metrics Changes - North America organic net sales declined 3.2%, with growth in Canada offset by lower U.S. sales [33] - International developed markets saw a 2.2% decline in organic net sales, primarily due to the UK [34] - Emerging markets experienced a 7.6% increase in organic net sales, driven by double-digit growth in Latin America and the Middle East [34][25] Market Data and Key Metrics Changes - Global Away From Home organic net sales declined 1.9%, with continued growth in international Away From Home [10] - The U.S. Away From Home industry continues to face pressure due to traffic headwinds [10] - Emerging markets are projected to reach a double-digit growth pace by year-end [44] Company Strategy and Development Direction - The company remains focused on long-term growth and value creation, unlocking efficiencies to reinvest in the business [9] - Investments are being made in North America retail, emerging markets, and away-from-home segments [5][12] - The brand growth system is on track to reach 40% sales coverage by year-end, up 30 percentage points from 2024 [12] Management's Comments on Operating Environment and Future Outlook - The macro environment remains volatile, with consumers seeking value through price and product benefits [6] - Management is optimistic about growth in emerging markets but does not anticipate improvement in the U.S. industry for the rest of 2025 [11] - The company is committed to maintaining a competitive annual dividend and targeting a net leverage ratio of three times [42] Other Important Information - The company announced an agreement to sell its infant and specialty food business in Italy to drive profitable growth [42] - A significant impairment charge of approximately $9,300,000,000 was recognized due to a sustained decline in share price [40] Q&A Session Summary Question: What are the expectations for organic net sales in 2025? - The company expects organic net sales to decline in the range of 1.5% to 3.5%, with growth anticipated in emerging markets [44] Question: How is the company addressing inflationary pressures? - The company is increasing investments in price and marketing to mitigate inflationary headwinds and drive momentum [36][37] Question: What is the outlook for adjusted operating income? - The company expects a decline of 5% to 10% in constant currency adjusted operating income, reflecting macroeconomic uncertainties [45]

Financial Data and Key Metrics Changes - The second quarter results met expectations with an improvement in year-over-year top line performance [4] - A noncash impairment charge of $9.3 billion was recorded due to a sustained decline in stock price, affecting the carrying value of intangible assets [16][17] Business Line Data and Key Metrics Changes - In emerging markets, top line growth was approximately 8% driven by both price and volume, with the highest operating income margin ever achieved [28] - North America retail showed a decline of 2.7% in the latest four weeks, excluding cold cuts and bacon, with year-to-date decline at 4% [29] Market Data and Key Metrics Changes - The company is experiencing challenges in North America retail, but improvements are noted in other segments, particularly in emerging markets [28][29] - Inflation is expected to be around 5% to 7% for the year, with pricing actions taken to mitigate impacts [26][50] Company Strategy and Development Direction - The company is focused on unlocking long-term shareholder value through strategic evaluations and investments in product superiority and manufacturing capabilities [4][10] - Continued investment in marketing and product innovation is planned, with a target of reaching 4.8% of net sales by the end of 2025 [22][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ongoing investments, emphasizing a disciplined approach to financial management [10][31] - The company is optimistic about growth opportunities in emerging markets and is committed to driving improvements in North America retail [28][30] Other Important Information - The company is actively expanding its brand growth system, which is expected to impact 40% of the business by the end of the year [46] - Significant product renovations are underway, with expectations of a 20% market increase year-over-year in the second half [32] Q&A Session Summary Question: Strategic transactions and potential business separation - Management is evaluating strategic options to unlock long-term value while maintaining financial discipline [10][11] Question: Details on impairment charge - A $9.3 billion noncash impairment charge was recorded due to a decline in stock price, which was anticipated [16][17] Question: Pricing and promotion levels - The company is investing in pricing and marketing, with a 100 basis point increase in pricing year-over-year and a 30 basis point increase in marketing [22][26] Question: Sales trends in emerging markets - Emerging markets saw an 8% top line growth, with confidence in achieving double-digit growth by year-end [36][38] Question: Timing of inflation and promotions - The impact of inflation and promotions pushed from Q2 to Q3 is estimated at 30 to 40 basis points [40][41] Question: Organic sales growth in North America Retail - The company is focused on stabilizing North America retail through investments in product superiority and marketing [46][48] Question: Gross margin outlook and inflation - Inflation is expected to remain at 5% to 7%, with a 100 basis point impact from tariffs anticipated [50][51] Question: Pace of innovation - Innovation as a percentage of sales increased from 1.6% in 2022 to 3% by the end of last year, with plans for further growth [65][66]

Financial Data and Key Metrics Changes - The second quarter results met expectations with an improvement in year-over-year top line performance [4] - A noncash impairment charge of $9.3 billion was recorded due to a sustained decline in stock price, affecting the carrying value of intangible assets [16][17] Business Line Data and Key Metrics Changes - In emerging markets, the top line grew approximately 8% driven by both price and volume, with the highest operating income margin ever achieved [28] - North America retail showed a decline of 2.7% in the latest four weeks, excluding cold cuts and bacon, with year-to-date performance down 4% [29] - Significant investments are being made in product renovations and marketing, particularly in key brands like mac and cheese, lunchables, and mayo [32] Market Data and Key Metrics Changes - The company is experiencing challenges in North America retail, which is seen as a gating factor for overall growth [45] - Inflation is expected to be around 5% to 7% for the year, with pricing actions being taken to mitigate impacts [52] Company Strategy and Development Direction - The company is focused on unlocking long-term shareholder value through strategic evaluations and investments in product superiority and manufacturing capabilities [4][10] - Continued investment in marketing is planned, aiming for 4.8% of net sales by the end of 2025, the highest level in nearly a decade [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ongoing investments, emphasizing a disciplined approach to financial management [10][11] - The company is optimistic about growth in emerging markets and is committed to driving improvements in North America retail through strategic investments [28][30] Other Important Information - The company is actively expanding its brand growth system, which is expected to impact about 40% of the business by the end of the year [48] - The company is also focusing on innovation, with a goal to increase the percentage of sales from new products from 3% to a higher level [66][67] Q&A Session Summary Question: Discussion on strategic transactions and potential business separation - Management is evaluating strategic options to unlock long-term value while maintaining financial discipline [10][11] Question: Details on the sizable impairment recorded - A $9.3 billion noncash impairment charge was due to a sustained decline in stock price affecting intangible assets [16][17] Question: Pricing and promotion levels - The company is investing in pricing and marketing, with a 100 basis point increase in pricing year-over-year and an additional 30 basis points in marketing [22][24] Question: Sales trends in emerging markets - Emerging markets saw an 8% top line growth, with confidence in achieving double-digit growth rates [36][38] Question: Impact of inflation and promotions on quarterly performance - The impact of inflation and promotions pushed from Q2 to Q3 is estimated to be around 30 to 40 basis points [40][41] Question: Organic sales growth in North America Retail - The company is focused on stabilizing and improving North America retail performance through strategic investments [45][48] Question: Gross margin outlook and inflation - Inflation is expected to remain high, with a significant impact from tariffs anticipated [52][53] Question: Confidence in investment plans amid volume declines - The company maintains a disciplined approach to investments and is expanding its brand growth system to drive improvements [59][60] Question: Pace of innovation and future goals - Innovation as a percentage of sales has increased from 1.6% to 3%, with plans to continue driving this upward [66][67]

Financial Data and Key Metrics Changes - The second quarter results met expectations with an improvement in year-over-year top line performance [4] - A noncash impairment charge of $9.3 billion was recorded due to a sustained decline in stock price, affecting the carrying value of intangible assets [15][16] Business Line Data and Key Metrics Changes - In emerging markets, the top line grew approximately 8% driven by both price and volume, with the highest operating income margin ever achieved [26] - North America retail showed a decline of 2.7% in the latest four weeks, excluding cold cuts and bacon, with year-to-date performance down 4% [27] - Significant investments are being made in product renovations and marketing, particularly in key brands like mac and cheese, lunchables, and mayo [30] Market Data and Key Metrics Changes - The company is experiencing a negative pricing trend in North America when excluding cost inflation, which is expected to be around 5% to 7% for the year [21][24] - The company is focusing on maintaining consumer-centric pricing strategies while investing in marketing to reach 4.8% of net sales by the end of 2025 [21][24] Company Strategy and Development Direction - The company is actively evaluating strategic options to unlock long-term shareholder value, maintaining financial discipline in any potential actions [9][10] - Continued investment in product superiority, manufacturing capabilities, and marketing is emphasized as a key strategy for growth [4][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ongoing investments, indicating that the company is not done with its growth initiatives [29] - The focus remains on driving improvements in North America retail through brand growth systems and product renovations [46][49] Other Important Information - The company is expanding its distribution and innovation efforts in the away-from-home segment, particularly in emerging markets [26][37] - The company anticipates some relief from commodity inflation in Q4, with ongoing high inflation in certain areas like heat and coffee [52] Q&A Session Summary Question: Discussion on strategic transactions and potential business separation - Management confirmed that the board is working urgently on evaluating strategic options to unlock long-term value, emphasizing financial discipline [9][10] Question: Details on the sizable impairment recorded - A noncash impairment charge of $9.3 billion was due to a sustained decline in stock price, which had been monitored for some time [15][16] Question: Pricing and promotion levels - The company is investing in pricing and marketing, with a 100 basis point increase in pricing year-over-year and an additional 30 basis points in marketing [21][24] Question: Sales trends in emerging markets - Emerging markets saw an 8% top line growth, with confidence in achieving double-digit growth rates by year-end [36][37] Question: Gross margin outlook and inflation impact - Inflation is expected to remain at 5% to 7%, with a 100 basis point impact from tariffs anticipated for the year [52][53] Question: Innovation pace and future plans - Innovation as a percentage of sales increased from 1.6% in 2022 to about 3% by the end of last year, with plans to continue driving innovation [67][69]

Financial Data and Key Metrics Changes - The second quarter results met expectations with an improvement in year-over-year top line performance [4] - A noncash impairment charge of $9.3 billion was recorded due to a sustained decline in stock price, affecting the carrying value of intangible assets [15][16] Business Line Data and Key Metrics Changes - In emerging markets, top line growth was approximately 8% driven by both price and volume, with the highest operating income margin ever achieved [26] - North America retail showed a decline of 2.7% in the latest four weeks, excluding cold cuts and bacon, with year-to-date performance down 4% [27] - Significant investments in product renovations and marketing are expected to yield a 20% market increase year-over-year in the second half [30] Market Data and Key Metrics Changes - The company is experiencing challenges in North America retail, which is seen as a gating factor for overall growth [44] - Inflation is expected to be around 5% to 7% for the year, with pricing actions taken to mitigate impacts [24][52] Company Strategy and Development Direction - The company is focused on unlocking long-term shareholder value through strategic evaluations and potential transactions [9][10] - Investments are being made in product superiority, manufacturing capabilities, and marketing, with a goal to increase marketing spend to 4.8% of net sales by the end of 2025 [21][24] - The brand growth system is being expanded to more brands, with a focus on product renovation and innovation [60][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ongoing investments, despite current challenges in certain business segments [29][37] - The company is committed to maintaining financial discipline while exploring strategic options [9][10] Other Important Information - The company is actively monitoring inflationary pressures and adjusting pricing strategies accordingly [24][52] - There is a strong emphasis on innovation, with a goal to increase the percentage of sales from innovative products [67][69] Q&A Session Summary Question: Discussion on strategic transactions and potential business separation - Management confirmed that the board is evaluating strategic options to unlock long-term value while maintaining financial discipline [9][10] Question: Details on the sizable impairment charge - The impairment charge was due to a sustained decline in stock price affecting intangible assets, which had been monitored for some time [15][16] Question: Pricing and promotion strategies - The company is investing in pricing and marketing, with a year-over-year pricing increase of about 100 basis points and additional marketing investments [21][24] Question: Sales trends in emerging markets - Emerging markets showed an 8% growth in top line, with confidence in achieving double-digit growth by year-end [36][37] Question: Gross margin outlook and inflation impact - Inflation is expected to remain a challenge, with actions in place to mitigate its effects, including pricing adjustments [52][53] Question: Innovation pace and future plans - The company aims to increase innovation as a percentage of sales, with a focus on core product renovations and new market entries [67][69]

Summary of Kraft Heinz Company Conference Call Company Overview - **Company**: Kraft Heinz Company - **Key Executives**: Carlos Abrams Rivera (CEO), Andre Maciel (CFO) Industry Context - **Consumer Health**: The year has been challenging for many companies, with unexpected pressures on consumer health due to high interest rates and inflation affecting various socioeconomic classes [5][6] - **Market Dynamics**: The company is focusing on providing value to consumers amidst economic pressures, emphasizing the importance of quality products at affordable prices [6][7] Core Business Insights - **Brand Growth System**: Kraft Heinz is implementing a proprietary system to enhance product quality, packaging, and marketing, aiming to better meet consumer needs [9][10] - **Product Innovations**: Introduction of family-sized mac and cheese packs priced at $2 to cater to families seeking value [11] - **Market Strategy**: The company is diversifying its channels, moving towards stadiums and leisure venues to improve margins and reduce reliance on restaurants [12] Financial Strategy - **Strategic Transactions**: The company is evaluating potential strategic transactions to unlock shareholder value, believing its stock is currently undervalued [14] - **Investment Focus**: Kraft Heinz plans to invest approximately $300 million in pricing strategies to maintain competitiveness without relying heavily on promotions [16][17] - **Marketing Investment**: The marketing budget is set to reach 4.8% of net sales, the highest in over a decade, to support product quality and communication [22] Operational Efficiency - **Productivity Initiatives**: The company has made significant investments in supply chain efficiency, technology, and marketing effectiveness, leading to improved ROI on promotions [53][54] - **Sustainability Efforts**: Kraft Heinz is reducing food waste in factories by 40% through improved operational practices [59] Regulatory Environment - **Government Regulations**: The company is proactively addressing potential regulations regarding artificial colors and SNAP (Supplemental Nutrition Assistance Program) exposure, with a significant portion of its portfolio already compliant [66][70] Future Outlook - **Stabilization and Growth**: The company views 2025 as a year of stabilization, with ambitions for growth in 2026 and a return to performance targets in 2027 [74][76] - **Commitment to Investment**: Despite challenges, Kraft Heinz is committed to investing in its brands and operations to navigate the current market landscape [78] Additional Insights - **Employee Engagement**: The company has seen high employee engagement levels, indicating a strong internal culture focused on efficiency and ownership [72] - **Consumer Trends**: There is a bifurcation in consumer behavior, with premium products growing while value-seeking consumers are also significant [19] This summary encapsulates the key points discussed during the Kraft Heinz Company conference call, highlighting the company's strategies, market conditions, and future outlook.

Group 1: Partnership and Program Launch - The Kraft Heinz Company (KHC) is collaborating with Uber Eats to launch the HEINZ Verified program, aimed at promoting restaurants that serve HEINZ products in major cities [1][4] - The program is designed to help consumers easily locate restaurants offering HEINZ Ketchup, which is favored by over 84% of diners [1] Group 2: Consumer Offers and Restaurant Support - Uber Eats users can receive a $5 discount on orders of $30 or more from HEINZ Verified restaurants, enhancing visibility for these locations [2] - Participating restaurants will receive exclusive support from Kraft Heinz, including consumer insights, free product samples, and marketing assistance to strengthen customer connections [3] Group 3: Business Strategy and Performance - KHC's Away From Home business unit is driving growth through the HEINZ Verified initiative, which aims to enhance dining experiences and support local communities [4][5] - Kraft Heinz has been implementing effective pricing strategies, with a 0.9 percentage point year-over-year increase in pricing in Q1 2025, primarily due to higher input costs [9] - Despite strategic initiatives, KHC has faced weak volume performance, with a 5.6 percentage point decline in volume/mix in Q1 2025 compared to the previous year [11] Group 4: Stock Performance - KHC shares have decreased by 6.7% over the past month, compared to a 3.5% decline in the industry [12]

Financial Data and Key Metrics Changes - The company has maintained a strong balance sheet over the past five years, aligning short and long-term incentives with shareholder value creation and maintaining a disciplined capital allocation policy [19][20] - The company reported a dividend of $0.40 per share and authorized a $3 billion share repurchase program through December 2026, indicating a focus on returning value to shareholders [59] Business Line Data and Key Metrics Changes - In Emerging Markets, the company has achieved a 7% CAGR in top-line growth from 2022 to 2024, with nearly 175,000 new distribution points added since implementing the go-to-market model [8] - The North America Retail segment is facing challenges, but the company is prioritizing brands under pressure, such as Lunchables and Capri Sun, with new product innovations and marketing campaigns [11][12] Market Data and Key Metrics Changes - The U.S. Away from Home market is experiencing a slowdown, but the company is expanding its footprint and growing beyond ketchup, with partnerships like those with the Chicago Cubs and Hilton Hotels [9][10] - The company has consistently grown market share in the U.S. from 2021 to 2024, adding 16,000 new distribution points globally in Q1 of the current year [10] Company Strategy and Development Direction - The company is focused on three strategic pillars: North America Retail, Global Away From Home, and Emerging Markets, with an emphasis on sustainable growth and brand investment [7][14] - The company aims to innovate and evolve its product offerings to meet consumer preferences, including gluten-free and dairy-free options, while maintaining a commitment to quality [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges market pressures but expresses confidence in the company's strategic direction and the strength of its brands [7][24] - The company anticipates inflation of 5% to 7% in 2025, primarily driven by commodity costs, and is embedding this into its guidance [55] Other Important Information - The company has achieved its highest employee engagement scores ever in 2024 and has been recognized as a great place to work in 22 countries [21][22] - The company has won multiple awards for its marketing campaigns, indicating a strong focus on creative excellence and brand building [15][16] Q&A Session Summary Question: Will Kraft Heinz commit to establishing new nutrition targets using recognized models? - The company acknowledges the lack of a globally aligned nutrition profile model but has established its own guidelines and is reviewing external models [52][53] Question: Is it a good time for acquisitions given the depressed stock prices in the food industry? - The company is always looking for portfolio management opportunities and has a strong balance sheet, but will maintain financial discipline in any actions taken [54][55] Question: Will Kraft Heinz reconsider commitments regarding cage-free eggs? - The company stands by its commitment to globally source cage-free eggs while working with suppliers to improve sourcing options [57][58] Question: When can shareholders expect a dividend increase? - The company recently declared a dividend of $0.40 per share and believes the share repurchase program provides better opportunities for returning value to shareholders [59] Question: Why is the stock price not performing well, and what is being done to correct it? - The company believes it is currently undervalued and is focused on executing its plans for 2025 and beyond to create opportunities for investors [60]

Financial Data and Key Metrics Changes - Organic net sales declined by 4.7% year-over-year, with price up 0.9 percentage points and volume mix down 5.6 percentage points [42] - Adjusted operating income decreased by 5.2%, while adjusted operating income margin increased by 30 basis points due to strong performance in emerging markets [44] - Free cash flow conversion improved by 9 percentage points year-over-year, reaching 65% [49] - Adjusted EPS declined by 10.1% to $0.62, impacted by a higher effective tax rate [49][57] Business Line Data and Key Metrics Changes - North America organic net sales declined by 6.5%, with growth in Canada offset by lower sales in U.S. retail and away from home [42] - International developed markets saw a 1.7% decline in organic net sales, primarily due to a slowdown in the UK [43] - Emerging markets experienced a 3.9% increase in organic net sales, driven by recovery in Brazil [43][32] Market Data and Key Metrics Changes - The U.S. away from home market faced challenges due to declining traffic, impacting total U.S. away from home business [14][31] - Emerging markets showed strong growth, with Heinz brand sales in these markets reaching over $1 billion [32] Company Strategy and Development Direction - The company is focused on unlocking efficiencies and reinvesting in the business to drive brand and product growth [9][11] - A commitment to continuous improvement is emphasized, with a goal to unlock $2.5 billion in gross efficiencies by 2027 [10] - The brand growth system is being expanded to cover 40% of sales by year-end, up from 10% in 2024 [11][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged pressures from inflation and tariffs, leading to a revised outlook for organic net sales and operating income [7][54] - The company expects organic net sales to decline between 1.5% to 3.5% for the full year, reflecting worsening consumer sentiment [54][55] - Management remains optimistic about emerging markets, anticipating double-digit growth by the end of 2025 [43][54] Other Important Information - The company returned nearly $900 million to shareholders year-to-date, maintaining a net leverage target of approximately 3x [52] - Significant marketing investments are planned for 2025, with a focus on optimizing media spend and driving better returns [47] Q&A Session Summary Question: What are the expectations for organic net sales in 2025? - The company has lowered its expectations for organic net sales to a range of down 1.5% to down 3.5% due to macroeconomic challenges [54] Question: How is the company addressing inflation and cost pressures? - The company is increasing investments in pricing and optimizing marketing spend to support brands and mitigate inflation impacts [46][55] Question: What is the outlook for emerging markets? - Emerging markets are expected to continue growing, with a target of reaching double-digit growth by the fourth quarter of 2025 [43][54]

Financial Data and Key Metrics Changes - Organic net sales declined by 4.7% year-over-year, with price up 0.9 percentage points and volume mix down 5.6 percentage points [42] - Adjusted operating income decreased by 5.2%, while adjusted operating income margin increased by 30 basis points due to strong performance in emerging markets [44] - Free cash flow conversion improved by 9 percentage points year-over-year, reaching 65% [49] Business Line Data and Key Metrics Changes - North America organic net sales declined by 6.5%, impacted by lower sales in U.S. retail and away from home [42] - Emerging markets saw organic net sales growth of 3.9%, an improvement from 2.2% in the previous quarter [43] - Adjusted operating income in North America decreased by 9.4%, while in emerging markets, it increased by 20.3% [44][45] Market Data and Key Metrics Changes - The U.S. away from home market faced a downturn due to economic uncertainty, with traffic declining across the sector [29][31] - International developed markets experienced a 1.7% decline in organic net sales, primarily due to weakening consumer sentiment in the UK [43] - Emerging markets are expected to reach double-digit growth by the fourth quarter of 2025 [43] Company Strategy and Development Direction - The company is focused on unlocking efficiencies and reinvesting in the business to drive brand and product growth [9][11] - A commitment to continuous improvement is emphasized, with a goal to unlock $2.5 billion in gross efficiencies by 2027 [10] - The brand growth system is being expanded to cover 40% of sales by year-end, up from 10% in 2024 [11][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged pressures from inflation and tariffs, impacting consumer sentiment and business operations [6][60] - The company has lowered its organic net sales expectations for 2025, now anticipating a decline of 1.5% to 3.5% [53][54] - Future guidance reflects increased costs and a wider range of uncertainty due to macroeconomic dynamics [55] Other Important Information - The company returned nearly $900 million to shareholders year-to-date, maintaining a net leverage target of approximately 3x [52] - Adjusted EPS is expected to be in the range of $2.51 to $2.67, reflecting changes in organic net sales and operating income estimates [56] - The company is investing in strategic areas, including marketing efficiency and brand support, to drive growth [47] Q&A Session Summary Question: What are the expectations for organic net sales in 2025? - The company now expects organic net sales to decline by 1.5% to 3.5%, a revision from previous expectations of flat to down 2.5% [53][54] Question: How is the company addressing inflation and consumer sentiment challenges? - The company is focusing on unlocking efficiencies, optimizing marketing spend, and increasing investments in pricing to support brands [46][60] Question: What is the outlook for emerging markets? - Emerging markets are expected to continue growing, with a target of reaching double-digit growth by the fourth quarter of 2025 [43]