Core Viewpoint - Masan Consumer is exploring the sale of a minority stake of up to $1 billion ahead of its planned stock market listing, aiming to attract pre-IPO investors to enhance valuations and market interest [1][2]. Group 1: Pre-IPO Investment Plans - The company is in early discussions to secure a pre-IPO investor who could acquire between 15% and 20% of its business [1][2]. - The stake sale is expected to be finalized before the company's listing on the Ho Chi Minh Stock Exchange, which is scheduled for the second quarter of next year [2]. Group 2: Market Context and Recovery - Masan's listing plans were previously postponed due to U.S. tariffs, which initially threatened a 46% tariff on Vietnamese exports to the U.S. [3]. - A subsequent agreement reduced the tariff to 20%, alleviating investor concerns and contributing to a 22% rebound in Vietnam's main equity index over the summer, with year-to-date gains of 31% [3]. Group 3: Regional IPO Activity - Investor confidence in Asia has improved due to tariff adjustments and U.S. Federal Reserve monetary easing, leading to increased deal-making activity in the region [4]. - Masan Consumer, currently trading on Hanoi's UPCoM, plans to transition to the main board in Ho Chi Minh City [4]. Group 4: Company Overview - Founded in 1996, Masan Consumer is one of Vietnam's largest fast-moving consumer goods companies, with a diverse portfolio including instant noodles, sauces, coffee, and beverages, and exports to over 15 countries [5]. - The company is nearly 70% owned by Masan Group, a diversified conglomerate involved in various sectors including retail, finance, and mineral resources [5].

Core Insights - The Kraft Heinz Company (KHC) is a major player in the global food and beverage industry, with a market capitalization of $31.8 billion and a diverse product range [1][2] Company Performance - KHC stock has decreased by 26.5% from its 52-week high of $36.31 on October 21, 2024, while showing a slight increase of 72 basis points over the past three months, outperforming the First Trust Nasdaq Food & Beverage ETF (FTXG), which declined by 1.3% during the same period [3] - Year-to-date, KHC stock has dropped 13.2%, and over the past 52 weeks, it has fallen by 26%, significantly underperforming FTXG's 3.5% dip in 2025 and 14.4% decline over the past year [4] - Following the release of Q2 results on July 30, KHC's organic sales fell by 2%, leading to a 1.9% year-over-year decrease in total revenue to $6.35 billion. Adjusted gross margins contracted by 140 basis points to 34.1%, and adjusted operating income declined by 7.5% to $1.3 billion. Adjusted EPS dropped by 11.5% to $0.69 but exceeded consensus estimates by 7.8% [5] Competitive Position - KHC has performed slightly better than Hormel Foods Corporation (HRL), which saw an 18.7% decline year-to-date, but KHC underperformed HRL's 21.2% drop over the past 52 weeks [6]

Financial Data and Key Metrics Changes - Total organic sales increased by 2% in the second quarter, primarily driven by volume growth [6][29] - Adjusted operating income increased by 10%, with a 11% increase when excluding currency impacts [34][36] - Adjusted earnings per share for the second quarter was $0.69, comparable to the previous year [36] Business Line Data and Key Metrics Changes - Consumer segment organic sales grew by 3%, driven by volume and mix, with a 4% volume growth in The Americas [30][29] - Flavor Solutions segment organic sales were flat, with a 1% price contribution offset by a 1% decline in volume and mix [31][32] - In the Americas, Flavor Solutions organic sales increased by 1%, reflecting a 2% price contribution [31] Market Data and Key Metrics Changes - In Asia Pacific, organic sales in the Consumer segment increased by 4%, driven by volume growth, particularly in China [30][31] - EMEA experienced a 7% decrease in Flavor Solutions organic sales, impacted by geopolitical issues and softness in customer volumes [32][21] - The Americas saw strong volume growth and share gains across core categories, while EMEA reflected select pricing actions to cover rising commodity costs [7][30] Company Strategy and Development Direction - The company focuses on profitable volume-led growth through brand investment, distribution expansion, innovation, and operational efficiencies [4][5] - Plans to drive growth include category management, brand marketing, new products, and leveraging data analytics for digital transformation [22][28] - The company aims to mitigate tariff impacts through sourcing strategies and operational efficiencies while maintaining volume momentum [12][40] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are adapting to economic pressures by changing shopping habits but continue to spend on flavor [8][9] - The company expects continued volume growth and strong consumption trends in the second half of the year [23][44] - Management remains confident in achieving long-term objectives despite current macroeconomic uncertainties [47][49] Other Important Information - The company has a global manufacturing footprint, with over 85% of products sold in major markets produced locally [39] - Tariff exposure is approximately $90 million annually, with plans to offset this through sourcing and pricing strategies [40][41] - The adjusted effective tax rate for the second quarter was 24%, compared to 14% in the previous year [35] Q&A Session Summary Question: What surprised you about the second quarter results? - Management noted that the consumer business performed well, driven by volume across core categories, and flavor solutions managed to perform better than expected despite tough conditions [52][54] Question: Can you elaborate on tariff mitigation actions? - The majority of mitigation actions are driven by sourcing and operational efficiencies, with targeted pricing as a residual approach [60][62] Question: Can you provide more detail on gross tariff exposure? - The $90 million exposure is primarily related to raw materials that cannot be sourced domestically, with a blended tariff rate impacting about 2% of COGS globally [71][73] Question: What are the pressures on certain commodities? - The global trade environment has created a standstill, impacting supply-demand dynamics and gross margins, leading to a revised gross margin outlook [92][93]

Financial Data and Key Metrics Changes - Total organic sales increased by 2% in Q2 2025, primarily driven by volume growth, with volume growth of more than 3% in the Consumer segment [6][28] - Adjusted operating income increased by 10%, with a 11% increase when excluding currency impacts [32] - Adjusted earnings per share for Q2 2025 was $0.69, comparable to the previous year [35] Business Line Data and Key Metrics Changes - Consumer segment organic sales increased by 3%, driven by volume and mix, with volume growth of 4% in The Americas [28][29] - Flavor Solutions segment organic sales were flat, with a 1% contribution from price offset by a 1% decline in volume and mix [30] - In The Americas, Flavor Solutions organic sales increased by 1%, reflecting a 2% price contribution, partially offset by a 1% decline in volume [30] Market Data and Key Metrics Changes - In EMEA, consumer organic sales grew by 3%, driven by a 2% increase in volume and a 1% increase in price due to commodity costs [29] - Asia Pacific region saw a 4% increase in consumer organic sales, driven by volume growth, reflecting a gradual recovery in China [29] - Flavor Solutions organic sales in EMEA decreased by 7%, impacted by lower volumes and prices due to geopolitical issues [31] Company Strategy and Development Direction - The company is focused on profitable volume-led growth by investing in brands, expanding distribution, driving innovation, and increasing operational efficiencies [4][5] - Plans to offset tariff costs through sourcing strategies and advanced analytics, while maintaining volume momentum [12][39] - Continued emphasis on health and wellness trends, with a focus on flavoring rather than competing for calories [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are adapting to economic pressures by shopping differently, but continue to spend on flavor [8] - The company expects to maintain its volume-led momentum and expand operating margins in 2025 despite ongoing challenges [46] - The outlook for 2025 includes maintaining net sales and adjusted operating profit guidance, with organic net sales growth expected to range between 1% to 3% [40][41] Other Important Information - The company is experiencing elevated cost pressures due to global trade uncertainties, impacting gross margins [31][40] - Cash flow from operations was $161 million, a decrease from $302 million in the previous year, driven by higher cash used due to working capital timing [36] - The company is committed to maintaining a strong balance sheet while funding growth investments and returning cash to shareholders [36] Q&A Session Summary Question: What surprised you about the second quarter results? - Management noted that the consumer business performed well, driven by volume across core categories, and they outperformed expectations in flavor solutions despite tough conditions [50][53] Question: Can you elaborate on tariff mitigation actions? - The majority of mitigation actions are driven by sourcing and CCI, with targeted pricing as a residual approach [59][60] Question: Can you provide more detail on gross tariff exposure? - The gross tariff exposure is approximately $90 million, primarily related to raw materials that cannot be sourced domestically [69][72] Question: How does the company balance sourcing lower-cost options with maintaining quality? - The company emphasizes that there is no trade-off between quality and cost, maintaining high standards while finding cost-effective sourcing options [89][91] Question: What is the impact of the global trade environment on commodity costs? - The global trade environment has led to elevated pressure on certain commodities, impacting gross margins, and the company is mitigating this through SG&A initiatives [90][94]