Kraft Heinz Q2 2026 Prepared Remarks Earnings Report

Kraft Heinz EPS Results

• Actual EPS: $0.56
• Consensus EPS: $0.53
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.69

Kraft Heinz Revenue Results

• Actual Revenue: $6.26 billion
• Expected Revenue: $6.18 billion
• Beat/Miss: Beat by +$85.63 million
• YoY Revenue Growth: -1.40%

Kraft Heinz Announcement Details

• Quarter: Q2 2026 Prepared Remarks
• Date: 8/5/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 7:00AM ET

The Kraft Heinz (NASDAQ:KHC) (NASDAQ: KHC) is a global food and beverage company formed in 2015 through the merger of Kraft Foods Group and H.J. Heinz Company. The combination created one of the largest packaged-food companies in the world, built around well-known consumer brands. The merger was supported by major investors and established a multi-national platform for branded food products.

Kraft Heinz develops, manufactures, markets and distributes a broad portfolio of branded packaged foods and condiments. Its product assortment includes iconic household names in categories such as condiments and sauces, cheese and dairy, meals and sides, meats, coffee and other shelf-stable and refrigerated items. The company sells products through retail, foodservice and other channels, and operates across North America, Europe, Latin America and parts of the Asia-Pacific region, serving consumers in many international markets.

Kraft Heinz is headquartered in Chicago with historic operational roots in Pittsburgh and maintains global manufacturing, research and development, and sales operations to support its portfolio. The company emphasizes brand management, scale manufacturing and global distribution as core elements of its business model. Miguel Patricio has served as chief executive officer since 2019, leading efforts to refresh the company’s brand portfolio and improve growth execution while leveraging the company’s extensive marketing and supply-chain capabilities.

Kraft Heinz Q2 2026 Prepared Remarks Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Kraft Heinz raised its 2026 Organic Net Sales outlook to a decline of 2% to 0.5%, from the previous range of down 3.5% to down 1.5%, after first-half results exceeded expectations.
• Positive Sentiment: Share trends improved, with revenue gaining or holding share rising to 36% year to date from 21% in 2025; Emerging Markets sales grew 8.5% and global away-from-home sales increased 2.9% in the quarter.
• Neutral Sentiment: Management is adding another $100 million to 2026 investments, bringing total incremental spending to approximately $700 million, primarily for marketing, product innovation, sales, and R&D. Executives said the spending is intended to strengthen the U.S. turnaround and support growth in 2027.
• Negative Sentiment: Adjusted operating income fell 18.4% and adjusted EPS declined 18.8% to $0.56 in the second quarter, driven largely by increased marketing and higher variable compensation; full-year adjusted operating income guidance was narrowed to a decline of 18% to 16%.
• Negative Sentiment: The company recognized a substantial non-cash $7.4 billion impairment charge, while inflation is expected to remain slightly above 4% for 2026 and net leverage is projected to remain as high as 3.3 times.

Presentation

[Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company]

Hello, this is Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company. I'd like to welcome you to our second quarter 2026 business update. During the following remarks, we will make forward-looking statements regarding our expectations for the future, including related to our business plans and expectations, strategy, efforts and investments, and related timing and expected impacts. These statements are based on how we see things today, and actual results may differ materially due to risk and uncertainties. Please see the cautionary statements and risk factors contained in today's earnings release, which accompany these remarks, as well as our most recent 10-K, 10-Q, and 8-K filings for more information regarding these risks and uncertainties. Additionally, we will refer to Non-GAAP financial measures, which exclude certain items from our financial results reported in accordance with GAAP.

[Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company]

Please refer to today's earnings release and the Non-GAAP information that accompany these remarks, which are available on our website at ir.kraftheinzcompany.com under News & Events for a discussion of our Non-GAAP financial measures and reconciliations to the comparable GAAP financial measures. Today, our Chief Executive Officer, Steve Cahillane, will provide an update on our business performance and overall strategy. Andre Maciel, our Chief Global Financial Officer, will then provide a financial review of the second quarter results, and we will conclude by discussing our 2026 outlook. We have also scheduled a separate live question and answer session with analysts. You can access our question and answer session at ir.kraftheinzcompany.com. A replay will also be available following the event through the same website. With that, I will now turn it over to Steve.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Thank you, Anne-Marie, and thank you all for joining us. The momentum we built in the first quarter continued into the second quarter as we delivered results ahead of our expectations. On the top line, our over delivery was broad-based, driven by better than expected performance in U.S. retail, global away from home, and Emerging Markets. Our traction reflects the work we've done to meet consumers where they are, ensuring our brands remain relevant at a time when consumers continue to prioritize value and affordability. We are seeing continued progress on share recovery, and we know our investments are working. This gives us the confidence to raise our outlook for Organic Net Sales. To build on this progress, we are increasing our 2026 incremental spend by $100 million to approximately $700 million.

[Steve Cahillane, CEO at The Kraft Heinz Company]

We know that investing behind our brands is the right decision and that it sets us up for an even stronger 2027. Let me be clear, we are increasing investments from a position of strength, not because what we are doing is not working, but precisely because it is, and we intend to build on that momentum. As a result of the increased investments, we are narrowing our guidance range for constant currency adjusted operating income. Overall, we are ahead of our 2026 operating plan and our goal is unchanged. We are making investments in the business to position ourselves to return to volume-led, sustainable, and profitable growth. As encouraging as it is that we are running ahead of our expectations, there is still more work to be done.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Organic Net Sales were down 1.3%, driven by a decline in U.S. retail, partially offset by growth in Emerging Markets and global away from home. These results included a 100 basis point headwind from Easter timing. Compared to the first quarter, our underlying performance improved when adjusting for this shift. adjusted gross profit margin was flat versus the prior year, a result of strong productivity that helped to offset the impact from inflation. constant currency adjusted operating income declined 18.4%, reflecting our planned increase in marketing and higher variable compensation expense. Taken together, these factors drove adjusted EPS of $0.56 in the quarter. On cash, we again delivered strong results, with free cash flow up 10% versus the prior year, led by working capital gains. Combined with a healthy balance sheet, this allows us to constantly support our dividend while managing leverage. Turning to our market share performance.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Overall, the percentage of our revenue that is gaining or holding share is improving from 21% in 2025 to 36% year to date. This reflects improving trends from last year across all three portfolio groups, hold, win, and win big. When we look specifically at win big, 45% of our revenue is gaining or holding share year to date. This is led by our Heinz brand, which is gaining or holding share across market and category combinations, reflecting over 70% of revenue. Underscoring the breadth of Heinz, we grew sales across each region, North America, International Developed Markets, and Emerging Markets, and across categories including ketchup, mayonnaise, pasta sauce, and soups. In U.S. retail, we are also moving in the right direction. We ended 2025 with 12% of our revenue gaining or holding share. Year to date, we are now at 30%.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Through investments made in 2025 and early 2026, we have driven improvements across Taste Elevation, hydration, and dessert. That said, we still have work to do to address declines across meats and meals where we are taking targeted action. This includes price, product, and packaging investments across Oscar Mayer, and stepping up innovation and media across Kraft Mac & Cheese, where we are starting to see market share trends improve. We believe the investments we are making will continue to translate into stronger performance in U.S. retail.

[Steve Cahillane, CEO at The Kraft Heinz Company]

As a reminder, we are prioritizing investments by market share goal. Where we aim to hold share in brands like Oscar Mayer and Maxwell House, we are spending to defend. Where we aim to win, brands like Lunchables and JELL-O, we are investing selectively. Where we have the right to win big, like our Taste Elevation brands, Heinz and Philadelphia, we are distorting investments accordingly.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Turning to our 2026 operating plan. Our goal is to drive volume-led, sustainable, and profitable top-line growth while continuing to generate attractive free cash flow. To do this, we have built and are executing against clear plans to drive the turnaround of our U.S. business and accelerate momentum across our international markets, both in retail and away from home channels. Starting with the U.S. Building on the investments we made in 2025, earlier this year, we announced an incremental $600 million across product superiority, select pricing, marketing, sales, and R&D, of which the majority is focused on turning around our U.S. business. We over-delivered our expectations in the first half of the year, we are now increasing investments by allocating an additional $100 million. This incremental $100 million is an opportunistic acceleration and will be concentrated in marketing, building brand equity across our core and supporting innovation.

[Steve Cahillane, CEO at The Kraft Heinz Company]

We know our brands respond well when we invest behind them. We've seen the early green shoots, and we are going to build on that while continuing to improve how we allocate dollars and sharpen our execution. We are deploying these incremental dollars with discipline, and our strong balance sheet and robust free cash flow position us well to fund them. We also have continued to simplify our North America operating model, driving stronger accountability and faster decision-making throughout the organization. We have separated Taste Elevation and Away From Home into two distinct business units, giving them each dedicated focus and resources. At the same time, we have consolidated our supply chain and procurement function to improve efficiency and align with the new global structure.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Turning to our international business, as we look to accelerate momentum, growth will be led by our Heinz brand, along with distribution expansion in Emerging Markets. In the second half of 2026, we expect Emerging Markets growth to further accelerate. Let me walk you through how we're deploying our investment. As consumers continue to face economic pressure, affordability remains a major focus for us. That focus is shaping how we approach pricing, pack sizes, promotions, and innovation across our portfolio. Across price, we are making disciplined investments to improve the ROI of our promotional spend, expand access to opening price points, and in select cases, implement base price adjustments. Over the course of the year, we have improved the ROI of our promotional spend. At the same time, we have been laying the groundwork for our second half price investments.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Partnering with retailers on stronger joint business plans, ensuring that we are building quality merchandising through display and features. We have also introduced smaller and more accessible pack sizes in categories such as pasta sauce, cheese, and salad dressings. Within our portfolio, where commodity costs have come down, we're passing those savings onto the consumer, for example, in coffee. A portion of our investment is also geared towards people. We are increasing headcount throughout the organization, with a focus on our marketing and sales teams. As we assess our progress on this front, we are on track, having hired approximately half of our North America commercial needs. This includes investments across e-commerce, where we grew approximately 14% year-to-date through May.

[Steve Cahillane, CEO at The Kraft Heinz Company]

We are also making a significant step up in our marketing investment, increasing spend to at least 6% of net sales and putting our marketing dollars to work. We are strengthening brand equity through new campaigns like Heinz's "It Has to be HEINZ" and Philadelphia's "Really Philly Good." We are putting more media behind consumer-led innovation, including PowerMac, Capri Sun Hydrate, and Ore-Ida Shapes, and we are building strategic partnerships that elevate key moments and enable us to showcase our brands. As part of our America250 sponsorship, we unveiled The United Tastes of America, our largest portfolio campaign ever. At the heart of the campaign is a new national TV spot that brings multiple brands together in a single creative, featuring favorites like Heinz, Oscar Mayer, Kraft Singles, Kraft Mayo, and Kraft Dressings.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Going beyond the screen, we brought the celebration to life with a lineup of limited time, summer-ready innovations at retailers nationwide. Just a couple of weeks ago, we also announced a landmark multi-year strategic alliance with The Walt Disney Company. Brands including Heinz, Philadelphia, and Kraft Mac & Cheese will become part of moments tied to Disney's iconic franchises that guests and fans love most. Not only are we spending more to support our brand, but we are spending more efficiently. We've reallocated dollars towards higher return brand media, improved efficiency through fewer, more effective media partners, and launched stronger consumer-driven creative. Importantly, we're measuring direct sales impact, and we are seeing clear improvements. In addition to marketing, we are also stepping up investments in R&D to drive product superiority and value.

[Steve Cahillane, CEO at The Kraft Heinz Company]

These investments are increasing both capacity and capabilities to support our growth agenda across consumer experience, packaging innovation, and process development, all further enabled by digital advancements. Our R&D investments directly support our strategy of bigger and fewer as it pertains to innovation. We are continuing to launch, support, and scale innovation that is focused on consumer-driven platforms, including convenience, new occasions, and nutrition. Earlier this year, we launched Kraft Mac & Cheese PowerMac nationwide. We drove a lot of retailer excitement with distribution coming in very strong, over 35,000 stores. We are supporting the launch with media and promotions, both of which are live, and initial results are encouraging. While still early, velocities are in the top quartile and initial results show sales are highly incremental to our base and the overall category.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Capri Sun Hydrate is another innovation we've talked about and one that I'm really excited about. This is one of the first to market drinks with electrolytes designed specifically for kids. We rolled out to major retailers early in the second quarter, and it has quickly become the fastest turning innovation in kids' single-serve beverages, with top flavors turning at second quartile velocities and driving incrementality. Just now, we are starting to ship Philadelphia Lactose Free cream cheese. With lactose intolerance affecting up to 50 million Americans, Philadelphia is well-positioned to deliver our signature creaminess and taste without compromise. Customer sell-in has been strong, and we expect distribution to further ramp up as customer resets continue to roll out. Targeting a new set of consumers, we expect sales to be highly incremental to our base business. Now turning to our international markets.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Our focus remains on growing the core through our Heinz brand and distribution expansion in our Emerging Markets. Heinz grew approximately 12% in Emerging Markets in the second quarter. Around the world, we are expanding Heinz across new occasions and geographies while catering to local preferences and trends. Early in the second quarter, we launched Heinz Zero Ketchup in Brazil. With no added sugar, 50% fewer calories, 25% less sodium, a higher proportion of tomatoes, and selling for the same price as the original version, this is a great example of how we are meeting the consumer where they are. In the short time since launch, we are already capturing market share, and with media support just turning on, we expect to further accelerate sales velocities. We also continue to grow in Emerging Markets through increased distribution, with distribution points up approximately 4% in the second quarter.

[Steve Cahillane, CEO at The Kraft Heinz Company]

This includes continued expansion into the away-from-home channel, which grew over 5% in the quarter. Taking a closer look at our global away-from-home performance, we grew Organic Net Sales 2.9%. This was driven by a return to growth in the U.S. and continued growth in our Emerging Markets. This growth reflects an approximate 150 basis point benefit in the U.S. from World Cup-driven demand, in addition to lapping a prior year inventory deload. Outside of those impacts, which we do not expect to repeat, performance was driven by ongoing net new business wins. Away from home remains a strategic channel for us where we see significant opportunities, including growing beyond Heinz, expansion into non-commercial channels, and increased penetration in QSRs. As we look at the second half of the year, we anticipate continued growth in our global away-from-home business.

[Steve Cahillane, CEO at The Kraft Heinz Company]

You can see, we have built momentum in the first half of the year. With the bulk of our investment set to be in market in the second half, we remain focused on execution and delivering against our updated 2026 outlook. Andre will now walk you through our second quarter financial performance in more detail and our outlook for the year.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Thank you, Steve. Starting with our second quarter results. Organic Net Sales for Kraft Heinz declined 1.3%. Price contributed 1.3 percentage points, while volume mix declined 2.6 percentage points. Higher pricing was primarily driven by our Emerging Markets and North America coffee and kids single-serve beverage categories. Declining volume mix largely reflects softness in meats and in addition to 100 basis point headwind from the timing of Easter. Our top-line performance came ahead of expectations driven by U.S. retail, Emerging Markets, and global away from home. In U.S. retail, we also benefit from a pull forward of inventory by customers related to summer grilling and in anticipation of strong Fourth of July holiday activations. We estimate this benefit to be approximately 80 basis points for total Kraft Heinz. Now breaking down performance by region. North America Organic Net Sales declined 2.7% versus the prior year.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Growth in Canada and away from home was offset by declines in U.S. retail, which were primarily driven by meats. In our International Developed Markets, Organic Net Sales declined 0.7%. This was driven by market share pressure following customer negotiations in select regions, in addition to promotional phasing. These headwinds were partially offset by growth in Benelux and in the U.K., where we also gained share in the quarter. In Emerging Markets, Organic Net Sales were up 8.5%, with positive contribution from both price and volume mix. This was driven by solid growth across most countries in the region and was partially offset by 100 basis point impact from the decline in Indonesia. We expect to further accelerate growth in the second half of the year, having fully lapped the headwind in Indonesia by the third quarter.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Turning to the next slide, Kraft Heinz adjusted operating income declined 18.4% and our adjusted operating income margin decreased 350 basis points. Of the 18.4% decline, over 8 percentage points was driven by an increased market investment and nearly 7 percentage points was due to higher variable compensation expense. In North America, adjusted operating income declined 15.8% versus the prior year. This was primarily driven by investments in marketing and higher variable compensation. In International Developed Markets, adjusted operating income declined 9.1%. This was primarily driven by increased investments in marketing and higher variable compensation, with strong productivity offsetting inflationary pressures. In Emerging Markets, adjusted operating income increased 6.7%. This was driven by strong top-line performance, productivity, and a one-time gain from indirect tax recovery. These impacts were partially offset by inflation and investments in marketing.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

As you may recall, in the second quarter, we announced a change to our global operating structure. Effective July 1st, 2026, under this new structure, the European countries currently included in Emerging Markets will move into Europe and Pacific developed region. The results we cover today are in our previous structure, and we'll begin reporting under the new operating structure in the third quarter. Going deeper into how we are tracking against some of our investments. We have generated improvements in our return on promotions. Year to date, we have increased ROI by 3.4 percentage points versus prior year and have increased the percent of promotional spend with net positive ROI by 6.6 percentage points. As Steve mentioned, we are allocating an incremental $100 million investment on top of the $600 million that was already in our plan. These incremental dollars are primarily going to marketing.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

We are seeing good returns on our marketing spend, which give us the confidence to step up our investments here. Based on our latest data, return on ad spend grew six percentage points globally. For the full year, we expect marketing to be at least 6% of net sales. In the first half of the year, marketing was up approximately 36% versus the prior year. Our plan also contemplates increasing investment in R&D. In the first half of the year, R&D was up 22% versus the prior year, which is relatively in line with our full-year expectation. Moving to adjusted gross profit margin. In the second quarter, our margin was flat versus the prior year. This was driven by productivity initiatives helping to offset inflation, mostly across manufacturing and logistics, and a positive impact from price.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Our inflation outlook for the full year remains slightly above 4%, reflecting current macroeconomic volatility and ongoing geopolitical conflicts. We are well-hedged on energy and edible oils, providing coverage throughout most of 2026. We also have hedges in place on certain resins and metals through mid Q3. As those roll off, we expect greater exposure to spot prices in the fourth quarter. Helping to mitigate these inflationary pressures, we continue to drive strong gross efficiencies that support our gross margin. We delivered over $330 million year-to-date, representing at least 4% of COGS, a pace that we expect to continue throughout the rest of the year. In terms of adjusted EPS, we declined approximately 18.8% or $0.13 versus the second quarter of 2025. The decline was driven, as expected, by increased marketing and variable compensation expense.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Looking at free cash flow, year to date, we generated approximately $1.7 billion, a 10% increase versus prior year. Free cash flow conversion of 123%, represented a 27 percentage point increase compared to last year. The increase in free cash flow was driven primarily by improvements in working capital across payables. These improvements reflect improved payment terms through collaborative supplier negotiations.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

Our free cash flow conversion also benefit from marketing accruals, with the impact to cash expected in subsequent quarters. In the second quarter, we also recognized a non-cash $7.4 billion impairment charge. Turning to capital allocation. Our priorities are unchanged and remain very clear, sustaining the dividend and protecting our investment-grade credit profile.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

With a strong balance sheet and solid free cash flow generation, we have the flexibility to navigate volatility while investing in the business and continuing to fund the dividend, reduce debt, and manage leverage in a disciplined way. In the second quarter, we used excess cash to pay down $1.9 billion of debt at its June maturity, and we recently repaid another $1 billion due in 2027. We also issued new EUR debt to fund a less tender offer for longer duration, higher coupon notes. The issuance was very successful as it reduced our interest costs and provided net deleveraging. We expect our 2026 net leverage to be no higher than 3.3x. We have a clear path to bring this back down to our target in about two years. Looking at our full year 2026 outlook.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

We are raising our expectations for Organic Net Sales, which we now expect to be down 2% to down 0.5%, versus our previous expectation of down 3.5% to down 1.5%. This outlook includes an approximate 100 basis point headwind from declines in SNAP benefits, which remains unchanged. Our outlook now contemplates adjusted gross profit margin in the range of down 50 basis points-10 basis points year-over-year. Previous guidance contemplated adjusted gross profit margin down 75 basis points-25 basis points year-over-year. Our updated expectation reflects targeted efficiencies of about 4%, inflation at slightly above 4%, and investments in price, product, and packaging. Our guidance assumes inflation that peaks as we head into the fourth quarter. While the market remains volatile as we see things today, we expect full year 2027 inflation to be between 4%-5%.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

In anticipation, we are proactively ramping productivity initiatives to offset as much of the impact as possible. For constant currency adjusted operating income, we are now narrowing our guidance range to a decline of 18%-16%. As a reminder, our previous expectation was to be down 18%-14%. Our new outlook reflect an additional step up in market investments and an increased impact from higher variable compensation, partially offset by stronger top-line expectations. As Steve said, we know that investing behind our brands is the right decision, setting us up for a stronger 2027. As a result, we expect adjusted EPS to be in the range of $2.03-$2.09 versus our previous expectations of $1.98-$2.10. Our adjusted EPS expectation contemplates an effective tax rate of approximately 24.5%.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

From a cash perspective, we now expect to generate free cash flow conversion of approximately 110%, versus our previous expectation of 100%. Looking specifically at the third quarter, we expect Organic Net Sales to be in the range of down 2.5%-1%. We expect the global away from home to grow low single digits and for Emerging Markets to improve relative to the second quarter year-over-year performance. In U.S. retail, while we anticipate continued improvement in share trends, we do expect that the inventory pull forward we saw in Q2 will be a 80 basis point headwind to our consolidated results in the third quarter. We also expect a headwind from promotional timing reflecting our planned step-up in investments. For adjusted operating income, we anticipate a decline in the range of down 25%-23%, primarily driven by a further step-up in investments.

[Andre Maciel, EVP and Global CFO at The Kraft Heinz Company]

This contemplates an adjusted gross profit margin that is expected to be down year-over-year as we increase investments in price. With that, let me pass it back to Steve for some closing comments.

[Steve Cahillane, CEO at The Kraft Heinz Company]

Thank you, Andre. We delivered a first half that was ahead of our original expectations. Driven by early investments, we have built momentum behind consumption and share trends. We are seeing improvements across key growth areas, including our Taste Elevation categories, global away from home, and across Emerging Markets. As we have previously said, should we over-deliver our expectations this year, we reserve the right to invest more. That is exactly what we are doing. With investments ramping up in this second half, there is a lot more to come. We are managing our portfolio of brands and geographies very effectively. We remain focused on disciplined execution and delivering against our updated outlook. Thank you for your time. Thank you for your interest in Kraft Heinz.

Participants

Executives

• Anne-Marie Megela, Head of Global Investor Relations
• Steve Cahillane, CEO
• Andre Maciel, EVP and Global CFO