Nov 4, 2026, 7:00 AM ETConsumer Defensive

Kraft Heinz — Third Quarter 2026 Earnings Summary

KHCKRAFT HEINZ CO

Financial Performance

Net sales for the three months ended September 26, 2026, decreased 2.0% year-over-year to $6.115 billion; organic net sales decreased 1.1%.
Gross profit margin increased 60 basis points to 32.5%; adjusted gross profit margin decreased 40 basis points to 31.9%.
Operating income decreased 14.6% to $0.875 billion; adjusted operating income decreased 15.2% to $0.939 billion.
Net income decreased 12.6% to $536 million; net income attributable to common shareholders decreased 11.5% to $544 million.
Diluted EPS was $0.46, down 11.5% from $0.52; adjusted EPS was $0.53, down 13.1% from $0.61.
Year-to-date net cash provided by operating activities was $3.0 billion, down 4.1% from the prior year.
Year-to-date free cash flow was $2.4 billion, down 5.2%; free cash flow conversion increased 11 percentage points to 120%.
Year-to-date return of capital to stockholders was $1.4 billion in cash dividends; no shares were repurchased under the public program.
For the nine months ended September 26, 2026, net sales decreased 0.9% to $18.424 billion; organic net sales decreased 0.9%.
Operating loss for the nine months was $4.411 billion (improved 23.3% from a $5.753 billion loss); adjusted operating income decreased 15.2% to $3.038 billion.
Net loss for the nine months was $4.125 billion (improved 36.5% from a $6.496 billion loss); diluted loss per share was $3.47 (improved 36.6% from $5.47).
Adjusted EPS for the nine months was $1.67, down 13.0% from $1.92.

Updated full-year 2026 organic net sales outlook to a decrease of 0.5% to 1.25% (previously -2% to -0.5%), including an approximate 100 basis point impact from incremental SNAP headwinds.
Updated constant currency adjusted operating income outlook to a decrease of 16% to 18% (unchanged range), anticipating adjusted gross profit margin at the low end of the previously provided range (-10 to -50 basis points).
Full-year adjusted EPS outlook raised to a range of $2.07 to $2.13 (previously $2.03 to $2.09).
Full-year adjusted gross profit margin expected to be at the low end of the previously provided range of down 10 to 50 basis points versus the prior year.
Full-year outlook includes incremental investments of approximately $700 million compared to 2025 and an approximate 500 basis point headwind from lapping lower incentive compensation.
Expected effective tax rate on adjusted EPS is approximately 23.5% (previously ~24.5%).
Expected interest expense is approximately $890 million; other expense/(income) is approximately $210 million of income.
Expected free cash flow conversion is approximately 110%.

North America net sales decreased 3.4% to $4.485 billion; organic net sales decreased 3.2% (price -0.8 pp, volume/mix -2.4 pp).
Europe and Pacific Developed Markets net sales decreased 5.6% to $910 million; organic net sales decreased 1.3% (price -0.4 pp, volume/mix -0.9 pp).
Emerging Markets net sales increased 13.8% to $720 million; organic net sales increased 15.6% (price +7.2 pp, volume/mix +8.4 pp).
Volume/mix declines in North America were driven by meats, sauces, and refreshment beverages, plus an approximate 80 basis point headwind from inventory pull forward into the second quarter.
Positive price in Emerging Markets offset negative price in North America and Europe and Pacific Developed Markets.
Segment adjusted operating income for the quarter: North America $911 million, Europe and Pacific Developed Markets $96 million, Emerging Markets $81 million.

Management stated that market share, sales, and volume trends are improving in every region relative to the prior year.
The company is increasingly meeting consumers where they are and providing reasons to choose its brands.
The company noted unfavorable volume/mix impacts were partially offset by efficiency initiatives.
The company highlighted its strong balance sheet as a competitive advantage providing flexibility to invest in brands and people.

Operating income and adjusted operating income were negatively impacted by increased inflationary pressures in procurement and logistics costs.
Higher variable compensation expense and increased advertising expenses contributed to income declines.
Non-cash impairment losses were $37 million higher in the current year period compared to the prior year.
Foreign currency had a 0.3 percentage point unfavorable impact on net sales; divestitures had a 0.6 percentage point unfavorable impact.
Forward-looking statements note risks including the potential separation of Kraft Heinz into two independent companies, which is currently paused.
Risks include volatility in commodity, energy, and input costs, foreign exchange rate fluctuations, and geopolitical conflicts.

CEO Steve Cahillane stated the 2026 operating plan to turn around the U.S. business and accelerate international growth is on track.
Cahillane expressed confidence in the momentum built, leading to the raising of the low end of the organic net sales outlook.
Management emphasized a strong balance sheet supporting continued investment in brands and people.
The tone regarding the turnaround plan is positive, citing improving trends in market share and sales across all regions.

The company paid $1.4 billion in cash dividends year-to-date.
No shares were repurchased under the publicly announced share repurchase program during the period.
Goodwill and intangible asset impairment losses for the nine months totaled $7.437 billion.
Separation costs for the nine months were $90 million.
Restructuring activities costs for the nine months were $38 million.
The company reported a loss on extinguishment of debt of $264 million for the nine months.
Deferred tax adjustments and favorable geographic mix of pre-tax income contributed to lower taxes on adjusted earnings.
The company's portfolio includes iconic brands such as Heinz, Kraft, Philadelphia, Primal Kitchen, and Lunchables.