The Kraft Heinz Company
Loading chart...
Item 1. Business.
General
We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious. Consumers are at the center of everything we do. With 2025 net sales of approximately $25 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of eight consumer-driven product platforms. As global citizens, we’re dedicated to making a sustainable, ethical impact while helping to feed the world in healthy, responsible ways.
On July 2, 2015, through a series of transactions, we consummated the merger of Kraft Foods Group, Inc. (“Kraft”) with and into a wholly-owned subsidiary of H.J. Heinz Holding Corporation (“Heinz”) (the “2015 Merger”). At the closing of the 2015 Merger, Heinz was renamed The Kraft Heinz Company, and H. J. Heinz Company changed its name to Kraft Heinz Foods Company (“KHFC”). On September 2, 2025, we announced our intention to separate our company into two independent publicly traded companies through a tax-free spin-off (the “Separation”). On February 11, 2026, we announced that the Kraft Heinz Board of Directors (the “Board”) has decided to pause work related to the Separation. If work related to the Separation is resumed, the Separation would be subject to the satisfaction of customary conditions, including final approval by the Board, receipt of favorable tax opinions of our U.S. tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission.
We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year. Unless the context requires otherwise, references to years and quarters contained herein pertain to our fiscal years and fiscal quarters. Our 2025 fiscal year was a 52-week period that ended on December 27, 2025, our 2024 fiscal year was a 52-week period that ended on December 28, 2024, and our 2023 fiscal year was a 52-week period that ended on December 30, 2023.
Reportable Segments:
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
See Note 21, Segment Reporting, in Item 8, Financial Statements and Supplementary Data, for our geographic financial information by segment.
Resources
Trademarks and Intellectual Property:
Our trademarks are material to our business and are among our most valuable assets. Depending on the country, trademarks generally remain valid for as long as they are in use or their registration status is maintained. Significant trademarks by segment based on net sales in 2025 were:
| Majority Owned and Licensed Trademarks | |||||||
| North America | Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Capri Sun*, Maxwell House, Kool-Aid, Jell-O | ||||||
International Developed Markets | Heinz, Golden Circle, Plasmon(a), Wattie’s | ||||||
Emerging Markets(b) | Heinz, Master, ABC, Quero, Kraft, Pudliszki | ||||||
(a) On December 31, 2025, in the first quarter of our fiscal year 2026, we divested our infant and specialty food business in Italy, which included our intellectual property rights to the Plasmon brand. See Note 5, Acquisitions and Divestitures, for additional information.
(b) Emerging Markets represents the aggregation of our WEEM and AEM operating segments.
*Used under license.
We sell certain products under brands we license from third parties. In 2025, brands used under licenses from third parties included Capri Sun packaged drink pouches for sale in our North America segment. We also grant certain licenses to third parties to use our intellectual property rights in select jurisdictions. In our agreements with an affiliate of Groupe Lactalis (“Lactalis”), we granted the other party various licenses to use certain of our and their respective intellectual property rights in perpetuity, including perpetual licenses for the Kraft and Velveeta brands for certain cheese products.
1
We also own numerous patents worldwide. We consider our portfolio of patents, patent applications, patent licenses under patents owned by third parties, proprietary trade secrets, technology, know-how processes, and related intellectual property rights to be material to our operations. Patents, issued or applied for, cover inventions ranging from packaging techniques to processes relating to specific products and to the products themselves. While our patent portfolio is material to our business, the loss of one patent or a group of related patents would not have a material adverse effect on our business.
Our issued patents extend for varying periods according to the date of the patent application filing or grant and the legal term of patents in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage as determined by the patent office or courts in the country, and the availability of legal remedies in the country.
Raw Materials and Packaging:
We manufacture (and contract for the manufacture of) our products from a wide variety of raw materials. We purchase and use large quantities of commodities, including dairy products, meat products, sugar and other sweeteners, coffee, tomato products, soybean and vegetable oils, eggs, other fruits and vegetables, and wheat and processed grains to manufacture our products. In addition, we purchase and use significant quantities of plastics, resin, cardboard, glass, paper and metal to package our products, and we use electricity, diesel fuel, and natural gas in the manufacturing and distribution of our products. For commodities that we use across many of our product categories we coordinate sourcing requirements and centralize procurement to leverage our scale. In addition, some of our product lines and brands separately source raw materials that are specific to their operations. We source these commodities from a variety of providers, ranging from large, international producers to smaller, local, independent sellers. Where appropriate, we seek to establish preferred purchaser status and have developed strategic partnerships with many of our suppliers with the objective of achieving favorable pricing and dependable supply for many of our commodities. The prices of raw materials that we use in our products are affected by external factors, such as global competition for resources, currency fluctuations, severe weather, including the impacts of global climate change, pandemics, geopolitical conflicts, consumer, industrial, or investment demand, and changes in governmental regulation and trade, tariffs, alternative energy, and agricultural programs. In 2025, we experienced increased inflationary pressures in our supply chain costs compared to the prior year period, due in part to the tariff and trade policy actions taken by the United States and foreign governments during the year. We expect these inflationary trends to moderate through 2026, although there continues to be significant uncertainty.
Our procurement teams monitor worldwide supply and cost trends so we can obtain ingredients and packaging needed for production at competitive prices. Although the prices of our principal raw materials can be expected to fluctuate, we believe there will be an adequate supply of the raw materials we use and that they are generally available from numerous sources. We use a range of hedging techniques in an effort to limit the impact of price fluctuations on many of our principal raw materials. However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw material costs. We actively monitor changes to commodity costs so that we can seek to mitigate the effect through pricing and other operational measures.
Research and Development
Our research and development efforts focus on achieving the following four objectives:
•product innovations, renovations, and new technologies to meet changing consumer needs, drive growth, and support our environmental and sustainability goals;
•world-class and uncompromising food safety, quality, and consistency;
•superior, consumer-preferred product and package performance; and
•continuous process, product, and supply chain optimization and productivity initiatives.
Competition
Our products are sold in highly competitive marketplaces, including e-commerce retailers, large-format retailers, and discounters. Our competitors include large national and international food and beverage companies and numerous local and regional companies. We compete with both branded and private label products sold by retailers, wholesalers, and cooperatives. We compete on the basis of product innovation, price, product quality, nutritional value, service, taste, convenience, brand recognition and loyalty, effectiveness of marketing and distribution, promotional activity, and the ability to identify and satisfy changing consumer preferences. Improving our market position or introducing new products requires substantial advertising, promotional, and research and development expenditures.
2
Sales
Sales and Customers:
Our products are sold through our own sales organizations and through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; and institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies. Our products are also sold online through various e-commerce platforms and retailers.
We have key customers in different regions around the world. In 2025, the five largest customers in our North America segment accounted for approximately 46% of North America segment net sales, the five largest customers in our International Developed Markets segment accounted for approximately 27% of International Developed Markets net sales, and the five largest customers in Emerging Markets accounted for approximately 15% of Emerging Markets net sales. Our largest customer, Walmart Inc., represented approximately 21% of our net sales in 2025, 2024, and 2023. Both of our reportable segments have sales to Walmart Inc.
As of December 27, 2025, we manage our sales portfolio through eight consumer-driven product platforms. A platform is a lens created for the portfolio based on a grouping of consumer needs and includes the following for Kraft Heinz: Taste Elevation, Easy Ready Meals, Substantial Snacking, Desserts, Hydration, Cheese, Coffee and Meats.
Taste Elevation includes condiments, sauces, dressings, and spreads. Easy Ready Meals includes Kraft Mac & Cheese varieties, frozen potato products, and other frozen meals. Substantial Snacking includes Lunchables meal kits, frozen snacks, and pickles. Desserts includes dry packaged desserts, refrigerated ready to eat desserts, and other dessert toppings. Hydration includes ready to drink beverages, powdered beverages, and liquid concentrates. Cheese includes American sliced and recipe cheeses. Coffee includes mainstream coffee, coffee pods, and premium coffee. Meats include cold cuts, bacon, and hot dogs.
The platforms are modular and configurable by reportable segment and market and help us to manage and organize our business effectively by providing insight into our various product categories and brands. Further, each platform is assigned a role within our business to help inform our resource allocation and investment decisions, which are made at the operating segment level. These roles include Accelerate, Protect, and Balance. The role of a platform may also vary by reportable segment and market.
3
Net Sales by Platform:
Net sales by platform as a percentage of consolidated net sales for the periods presented were:
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||
| ACCELERATE | |||||||||||||||
| Taste Elevation | 45 | % | 44 | % | |||||||||||
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Objective:
The following discussion provides an analysis of our financial condition and results of operations from management's perspective and should be read in conjunction with the condensed consolidated financial statements and related notes included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q. Our objective is to also provide discussion of material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or of future financial condition and to offer information that provides an understanding of our financial condition, results of operations, and cash flows.
Description of the Company:
We manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products throughout the world.
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”). We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
See Note 16, Segment Reporting, in Item 1, Financial Statements, for our financial information by segment.
Acquisitions and Divestitures:
On December 31, 2025, which was in the first quarter of our fiscal year 2026, we closed the sale of our infant and specialty food business in Italy within our International Developed Markets segment for cash consideration of approximately $146 million. See Note 4, Acquisitions and Divestitures, in Item 1, Financial Statements, for additional information on divestiture activities.
Business Trends and Items Affecting Comparability of Financial Results
Inflation and Tariff Impacts:
During the three months ended March 28, 2026, we experienced inflationary pressures in our supply chain costs at rates lower than those we experienced in the prior year period. However, we expect inflationary pressures to increase throughout 2026 due, in part, to the Iran Conflict, although there continues to be significant uncertainty. We continue to take measures to mitigate the impact of this inflation through efficiency initiatives, pricing actions, alternative sourcing, and hedging strategies. However, there has been, and we expect that there could continue to be, a difference between the timing of when these beneficial, mitigative actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we have taken have, in some instances, negatively impacted, and could continue to negatively impact, our market share.
Throughout 2025, we experienced increased inflationary pressures in our supply chain costs due to the tariff and trade policy actions taken by the United States. On February 20, 2026, the U.S. Supreme Court invalidated those tariffs imposed by the Trump Administration under the International Emergency Economic Power Act ("IEEPA"). In response to the Supreme Court's decision, the Trump Administration announced a new 10% global tariff under a different statutory authority, however, there remains uncertainty regarding the duration, scope, and likelihood of further legal challenges of the newly initiated tariffs.
Further, on March 4, 2026, the Court of International Trade ordered the Trump Administration to begin refunding all tariffs imposed under IEEPA. Kraft Heinz is not the Importer of Record for the majority of the raw materials we source from outside of the U.S. As a result, any recovery is dependent on the actions of our suppliers and the contractually negotiated outcomes with these suppliers. Therefore, the timing and the amount of recovery, if any, are uncertain at this time.
Iran Conflict
On February 28, 2026, the United States and Israel launched a joint military operation against Iran targeting the country's leadership, nuclear facilities, missile sites, and security forces. In response, Iran launched retaliatory strikes against Israel, Saudi Arabia, United Arab Emirates, and other countries in the Persian Gulf region. As of March 28, 2026, less than 1% of consolidated total assets were located in the impacted countries, and less than 1% of consolidated net sales were generated by our businesses in the region. While the Iran conflict did not have a material impact on our results of operations through the first quarter of 2026, the ongoing geopolitical tensions involving Iran have increased, and could continue to increase, the risk of supply-chain disruption and inflationary pressures, particularly related to procurement and logistics costs. As the situation is rapidly changing, we will continue to evaluate the potential impact that this conflict has on our business.
28
Regulatory Landscape:
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States. The OBBBA includes a broad range of changes to U.S. tax law, which did not have a material impact on our total tax provision as of March 28, 2026, and we do not expect the elective provisions of the law to have a material impact on our effective tax rate in future periods. Further, certain provision of the OBBBA impact the timing of cash tax payments, which resulted in a reduction of our cash tax payments in 2025, and is expected to reduce cash tax payments in 2026; however we do not expect these provisions to have a material impact on our cash flows in future periods.
The OBBBA also enacted modifications to the Supplemental Nutrition Assistance Program (“SNAP”). As of the first quarter of 2026, the modifications have resulted in a reduction of the number of SNAP participants and the average benefits received by the eligible participants, which has, and may continue to have, a negative impact on consumers’ demand for our products. While we have taken measures to attempt to mitigate these negative impacts, these modifications to the SNAP program may continue to have a negative impact on our results of operations, cash flows, and market share.
Previously Announced Separation Transaction:
On September 2, 2025, we announced a plan to separate the Company into two independent, publicly traded companies through a tax-free spin-off (the “Separation”). On February 11, 2026, we announced that the Kraft Heinz Board of Directors (the “Board”) has decided to pause work related to the Separation. If work related to the Separation is resumed, the Separation would be subject to the satisfaction of customary conditions, including final approval by the Board, receipt of favorable tax opinions of our U.S. tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission. The timing of the Separation and whether it will be completed is uncertain and we cannot assure that the Separation will be completed on the anticipated timeline or at all or that the terms of the Separation will not change. We incurred $56 million of separation costs for the three months ended March 28, 2026, primarily related to consulting, advisory and employee-related costs. These costs were recognized in SG&A on our consolidated statements of income.
Results of Operations
We disclose in this report certain non-GAAP financial measures. These non-GAAP financial measures assist management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our underlying operations. For additional information and reconciliations to the most closely comparable financial measures presented in our condensed consolidated financial statements, which are calculated in accordance with U.S. GAAP see Non-GAAP Financial Measures.
Consolidated Results of Operations
Summary of Results:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||||||||
| Net sales | $ | 6,047 | $ | 5,999 | 0.8 | % | |||||||||||||||||||||||
| Operating income/(loss) | 1,145 | 1,196 | (4.3) | % | |||||||||||||||||||||||||
| Net income/(loss) | 799 | 714 | 11.9 | % | |||||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | 798 | 712 | 12.1 | % | |||||||||||||||||||||||||
| Diluted EPS | 0.67 | 0.59 | 13.6 | % | |||||||||||||||||||||||||
Net Sales:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net sales | $ | 6,047 | $ | 5,999 | 0.8 | % | |||||||||||||||||||||||
Organic Net Sales(a) | 5,919 | 5,944 | (0.4) | % | |||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
29
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 0.8% to $6.0 billion for the three months ended March 28, 2026 compared to $6.0 billion for the three months ended March 29, 2025, including the favorable impact of foreign currency (1.9 pp) and unfavorable impact of acquisitions and divestitures (0.7 pp). Organic Net Sales decreased 0.4% to $5.9 billion for the three months ended March 28, 2026 compared to $5.9 billion for the three months ended March 29, 2025, primarily due to the unfavorable volume/mix (1.2 pp), which more than offset higher pricing (0.8 pp). Pricing was higher in each segment. Volume/mix was unfavorable in each segment.
Net Income/(Loss):
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Operating income/(loss) | $ | 1,145 | $ | 1,196 | (4.3) | % | |||||||||||||||||||||||
| Net income/(loss) | 799 | 714 | 11.9 | % | |||||||||||||||||||||||||
| Net income/(loss) attributable to common shareholders | 798 | 712 | 12.1 | % | |||||||||||||||||||||||||
Adjusted Operating Income(a) | 1,058 | 1,199 | (11.8) | % | |||||||||||||||||||||||||
(a) Adjusted Operating Income is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Operating income/(loss) decreased 4.3% to income of $1.1 billion for the three months ended March 28, 2026 compared to income of $1.2 billion for the three months ended March 29, 2025, primarily due to increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, separation costs incurred in the current year period, and increased restructuring costs. These unfavorable impacts to operating income/(loss) were partially offset by favorable changes in unrealized losses/(gains) on commodity hedges, higher pricing, and certain nonrecurring procurement cost recoveries.
Net income/(loss) increased 11.9% to income of $799 million for the three months ended March 28, 2026 compared to income of $714 million for the three months ended March 29, 2025. This increase was primarily driven by lower income tax expense and favorable changes in other expense/(income), partially offset by the unfavorable changes in operating income/(loss) factors discussed above and higher interest expense.
•Our effective tax rate for the three months ended March 28, 2026 was an expense of 20.9% on pre-tax income, compared to an expense of 29.9% for the three months ended March 29, 2025. The year-over-year change in the effective tax rate for the three-month period was primarily driven by certain favorable discrete income tax items, including the tax benefit on the Italy Infant Transaction, the revaluation of deferred tax balances due to changes in U.S. state tax rates, and the reversal of uncertain tax position reserves in certain U.S. states and non-U.S. jurisdictions.
•Other expense/(income) was $101 million of income for the three months ended March 28, 2026 compared to $51 million of income for the three months ended March 29, 2025. This change was primarily driven by a $41 million favorable change in net pension and postretirement non-service benefits related to the settlement of our U.S. Retiree Life Insurance Plan in the first quarter of 2026 and a $19 million increase in interest income.
Adjusted Operating Income decreased 11.8% to $1.1 billion for the three months ended March 28, 2026 compared to $1.2 billion for the three months ended March 29, 2025, primarily due to increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and unfavorable volume/mix. These unfavorable impacts more than offset higher pricing, certain nonrecurring procurement cost recoveries, and the favorable impact of foreign currency (0.7 pp).
30
Diluted EPS:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| Diluted EPS | $ | 0.67 | $ | 0.59 | 13.6 | % | |||||||||||||||||||||||
Adjusted EPS(a) | 0.58 | 0.62 | (6.5) | % | |||||||||||||||||||||||||
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Diluted EPS increased 13.6% to $0.67 for the three months ended March 28, 2026 compared to $0.59 for the three months ended March 29, 2025, primarily due to the net income/(loss) factors discussed above.
| For the Three Months Ended | |||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | $ Change | % Change | ||||||||||||||||||||
| Diluted EPS | $ | 0.67 | $ | 0.59 | $ | 0.08 | 13.6 | % | |||||||||||||||
| Restructuring activities | (0.02) | 0.01 | (0.03) | ||||||||||||||||||||
| Unrealized losses/(gains) on commodity hedges | (0.11) | — | (0.11) | ||||||||||||||||||||
| Impairment losses | 0.01 | — | 0.01 | ||||||||||||||||||||
| Separation costs | 0.04 | — | 0.04 | ||||||||||||||||||||
| Losses/(gains) on sale of business | (0.02) | — | (0.02) | ||||||||||||||||||||
| Nonmonetary currency devaluation | 0.01 | 0.01 | — | ||||||||||||||||||||
| Certain significant discrete income tax items | — | 0.01 | (0.01) | ||||||||||||||||||||
Adjusted EPS(a) | $ | 0.58 | $ | 0.62 | $ | (0.04) | (6.5) | % | |||||||||||||||
Key drivers of change in Adjusted EPS(a): | |||||||||||||||||||||||
| Results of operations | $ | (0.09) | |||||||||||||||||||||
| Effective tax rate | 0.05 | ||||||||||||||||||||||
| $ | (0.04) | ||||||||||||||||||||||
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Adjusted EPS decreased 6.5% to $0.58 for the three months ended March 28, 2026 compared to $0.62 for the three months ended March 29, 2025. This decrease was primarily due to lower Adjusted Operating Income, which more than offset lower taxes on adjusted earnings.
Results of Operations by Segment
We manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
Management evaluates segment performance based on several factors, including net sales, Organic Net Sales, and Segment Adjusted Operating Income. Segment Adjusted Operating Income is defined as operating income/(loss) excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, separation costs, and certain non-ordinary course legal and regulatory matters. Segment Adjusted Operating Income for Emerging Markets, which represents the aggregation of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments — North America and International Developed Markets. Segment Adjusted Operating Income is a financial measure that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management also uses Segment Adjusted Operating Income to allocate resources.
31
Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally available exchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in other expense/(income) on our condensed consolidated statements of income, as nonmonetary currency devaluation, rather than accumulated other comprehensive income/(losses) on our condensed consolidated balance sheets, until such time as the economy is no longer considered highly inflationary. See Note 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025, for additional information. We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Turkey, and Egypt, which are all in Emerging Markets.
Net Sales:
| For the Three Months Ended | |||||||||||||||||||
| March 28, 2026 | March 29, 2025 | ||||||||||||||||||
| (in millions) | |||||||||||||||||||
| Net sales: | |||||||||||||||||||
| North America | $ | 4,458 | $ | 4,488 | |||||||||||||||
| International Developed Markets | 843 | 817 | |||||||||||||||||
Emerging Markets | 746 | 694 | |||||||||||||||||
| Total net sales | $ | 6,047 | $ | 5,999 | |||||||||||||||
Organic Net Sales:
| For the Three Months Ended | |||||||||||||||||||
| March 28, 2026 | March 29, 2025 | ||||||||||||||||||
| (in millions) | |||||||||||||||||||
Organic Net Sales(a): | |||||||||||||||||||
| North America | $ | 4,438 | $ | 4,488 | |||||||||||||||
| International Developed Markets | 779 | 780 | |||||||||||||||||
Emerging Markets | 702 | 676 | |||||||||||||||||
| Total Organic Net Sales | $ | 5,919 | $ | 5,944 | |||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Drivers of the changes in net sales and Organic Net Sales for the three months ended March 28, 2026 compared to the three months ended March 29, 2025 were:
| Net Sales | Currency | Acquisitions and Divestitures | Organic Net Sales | Price | Volume/Mix | |||||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||
| North America | (0.7) | % | 0.4 pp | 0.0 pp | (1.1) | % | 0.4 pp | (1.5) pp | ||||||||||||||||||||||||||
| International Developed Markets | 3.2 | % | 7.9 pp | (4.6) pp | (0.1) | % | 0.2 pp | (0.3) pp | ||||||||||||||||||||||||||
Emerging Markets | 7.6 | % | 3.8 pp | 0.0 pp | 3.8 | % | 4.4 pp | (0.6) pp | ||||||||||||||||||||||||||
| Kraft Heinz | 0.8 | % | 1.9 pp | (0.7) pp | (0.4) | % | 0.8 pp | (1.2) pp | ||||||||||||||||||||||||||
32
Adjusted Operating Income:
| For the Three Months Ended | |||||||||||||||||||
| March 28, 2026 | March 29, 2025 | ||||||||||||||||||
| (in millions) | |||||||||||||||||||
| Segment Adjusted Operating Income: | |||||||||||||||||||
| North America | $ | 974 | $ | 1,101 | |||||||||||||||
| International Developed Markets | 133 | 127 | |||||||||||||||||
| Total Segment Adjusted Operating Income | 1,107 | 1,228 | |||||||||||||||||
Emerging Markets | 95 | 99 | |||||||||||||||||
| General corporate expenses | (144) | (128) | |||||||||||||||||
| Restructuring activities | (22) | (4) | |||||||||||||||||
| Unrealized gains/(losses) on commodity hedges | 178 | 1 | |||||||||||||||||
| Impairment losses | (13) | — | |||||||||||||||||
| Separation costs | (56) | — | |||||||||||||||||
| Operating income/(loss) | 1,145 | 1,196 | |||||||||||||||||
| Interest expense | 236 | 229 | |||||||||||||||||
| Other expense/(income) | (101) | (51) | |||||||||||||||||
| Income/(loss) before income taxes | $ | 1,010 | $ | 1,018 | |||||||||||||||
North America:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net sales | $ | 4,458 | $ | 4,488 | (0.7) | % | |||||||||||||||||||||||
Organic Net Sales(a) | 4,438 | 4,488 | (1.1) | % | |||||||||||||||||||||||||
Segment Adjusted Operating Income | 974 | 1,101 | (11.6) | % | |||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales decreased 0.7% to $4.5 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025. Organic Net Sales decreased 1.1% to $4.4 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (1.5 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to declines in coffee, cold cuts, powdered beverages, and frozen snacks, which more than offset the favorable impact to certain categories as a result of the shift in Easter timing. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.
Segment Adjusted Operating Income decreased 11.6% to $1.0 billion for the three months ended March 28, 2026 compared to $1.1 billion for the three months ended March 29, 2025, primarily due to inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, increased advertising expenses, and unfavorable volume/mix. These unfavorable impacts to Segment Adjusted Operating Income more than offset certain nonrecurring procurement cost recoveries, higher pricing, and the favorable impact of foreign currency (0.3 pp).
International Developed Markets:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net sales | $ | 843 | $ | 817 | 3.2 | % | |||||||||||||||||||||||
Organic Net Sales(a) | 779 | 780 | (0.1) | % | |||||||||||||||||||||||||
Segment Adjusted Operating Income | 133 | 127 | 4.9 | % | |||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
33
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 3.2% to $843 million for the three months ended March 28, 2026 compared to $817 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (7.9 pp) and unfavorable impact of acquisitions and divestitures (4.6 pp). Organic Net Sales decreased 0.1% to $779 million for the three months ended March 28, 2026 compared to $780 million for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (0.3 pp), which more than offset higher pricing (0.2 pp). Unfavorable volume/mix was primarily due to a temporary pause in shipments due to negotiations with certain customers within our Western Europe and Australia regions, which more than offset favorable volume/mix in the United Kingdom.
Segment Adjusted Operating Income increased 4.9% to $133 million for the three months ended March 28, 2026 compared to $127 million for the three months ended March 29, 2025, primarily driven by the favorable impact of foreign currency (7.0 pp) and decreased procurement costs, which more than offset the decrease in Segment Adjusted Operating Income resulting from the Italy Infant Transaction and increased advertising expenses.
Emerging Markets:
| For the Three Months Ended | |||||||||||||||||||||||||||||
| March 28, 2026 | March 29, 2025 | % Change | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Net sales | $ | 746 | $ | 694 | 7.6 | % | |||||||||||||||||||||||
Organic Net Sales(a) | 702 | 676 | 3.8 | % | |||||||||||||||||||||||||
Segment Adjusted Operating Income(b) | 95 | 99 | (4.0) | % | |||||||||||||||||||||||||
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
(b) Segment Adjusted Operating Income for Emerging Markets, which represents the combination of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments - North America and International Developed Markets.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 7.6% to $746 million for the three months ended March 28, 2026 compared to $694 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (3.8 pp). Organic Net Sales increased 3.8% to $702 million for the three months ended March 28, 2026 compared to $676 million for the three months ended March 29, 2025, primarily driven by higher pricing (4.4 pp), which more than offset unfavorable volume/mix (0.6 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Unfavorable volume/mix was primarily driven by Indonesia.
Segment Adjusted Operating Income decreased 4.0% to $95 million for the three months ended March 28, 2026 compared to $99 million for the three months ended March 29, 2025, primarily due to inflationary pressures in procurement and manufacturing costs that outpaced our efficiency initiatives, increased SG&A due, in part, to increased headcount in our sales and marketing teams, and increased advertising expenses. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.
Liquidity and Capital Resources
We believe that cash generated from our operating activities, as well as our access to other potential sources of liquidity including our available-for-sale debt securities, commercial paper programs, and our senior unsecured revolving credit facility (the “Senior Credit Facility”) will provide sufficient liquidity to meet our working capital needs, repayments of long-term debt, future contractual obligations, payment of our anticipated quarterly dividends, planned capital expenditures, restructuring expenditures, and contributions to our postemployment benefit plans for the next 12 months. An additional potential source of liquidity is access to capital markets. We intend to use our cash on hand and commercial paper programs for daily funding requirements.
Cash Flow Activity for the Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net Cash Provided by/Used for Operating Activities:
Net cash provided by operating activities was $1.0 billion for the three months ended March 28, 2026 compared to $720 million for the three months ended March 29, 2025. This increase was primarily driven by favorable changes in working capital, due, in part, to inventory optimization efforts and improved supplier payment terms, as well as favorable changes in collateral receipts related to our commodity derivative margin requirements. These impacts were partially offset by lower Adjusted Operating Income.
34
Net Cash Provided by/Used for Investing Activities:
Net cash provided by investing activities was $185 million for the three months ended March 28, 2026 compared to net cash used for investing activities of $878 million for the three months ended March 29, 2025. This change was primarily driven by higher purchases of marketable securities in the prior year period, proceeds received on the sale of marketable securities in 2026, and proceeds received in connection with the close of the Italy Infant Transaction. We expect 2026 capital expenditures to be approximately $900 million compared to the 2025 capital expenditures of $801 million. Our 2026 capital expenditures are expected to be primarily driven by maintenance projects, capital investments focused on generating growth, and investments in technology.
Net Cash Provided by/Used for Financing Activities:
Net cash used for financing activities was $512 million for the three months ended March 28, 2026 compared to net cash provided by financing activities of $900 million for the three months ended March 29, 2025. This change was primarily driven by debt proceeds received from the issuance of the 2025 Notes in the prior year period, partially offset by decreased repurchases of common stock compared to the prior year period.
Cash Held by International Subsidiaries:
Of the $3.3 billion cash and cash equivalents on our condensed consolidated balance sheet at March 28, 2026, $935 million was held by international subsidiaries.
Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. For those undistributed earnings considered to be indefinitely reinvested, our intent is to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate the accumulated earnings to fund our U.S. cash requirements. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2025 accumulated earnings of certain international subsidiaries is approximately $70 million.
Trade Payables Programs:
In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which
include the extension of payment terms. We maintain agreements with third-party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 250 days. All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold. The amounts confirmed outstanding under these programs were $756 million at March 28, 2026 and $755 million at December 27, 2025. The amounts were included in accounts payable on our consolidated balance sheets. See Note 13, Financing Arrangements, in Item 1, Financial Statements, for additional information on our trade payables programs.
Borrowing Arrangements:
As of the date of this filing, our long-term debt is rated BBB with a negative outlook from S&P Global Ratings and Fitch Ratings, and Baa2 with ratings under review for downgrade from Moody’s Investor Services, Inc.
From time to time, we obtain funding through our commercial paper programs. We had no commercial paper outstanding at March 28, 2026, at December 27, 2025, or during the three months ended March 28, 2026 or March 29, 2025.
Our Senior Credit Facility provides for a revolving commitment of $4.0 billion through July 8, 2030. Subject to certain conditions, we may increase the amount of revolving commitments and/or add tranches of term loans in a combined aggregate amount of up to $1.0 billion.
No amounts were drawn on our Senior Credit Facility at March 28, 2026 or December 27, 2025, or during the three months ended March 28, 2026 or March 29, 2025.
Our credit agreement contains customary representations, warranties, and covenants that are typical for these types of facilities and could, upon the occurrence of certain events of default, restrict our ability to access our Senior Credit Facility. We were in compliance with all financial covenants as of March 28, 2026.
Long-Term Debt:
Our long-term debt, including the current portion, was $21.1 billion at March 28, 2026 and $21.2 billion at December 27, 2025. This decrease was primarily due to the changes in foreign currency exchange rates on our foreign-denominated debt.
35
In the first quarter of 2025, KHFC, our 100% owned operating subsidiary, issued 600 million euro aggregate principal amount of 3.250% senior notes due March 2033, $500 million aggregate principal amount of 5.200% senior notes due March 2032, and $500 million aggregate principal amount of 5.400% senior notes due March 2035 (collectively, the “2025 Notes”). We used a portion of the net proceeds from the 2025 Notes to fund the 600 million euro senior notes that matured in May 2025 and for general corporate purposes, including our investment in certain marketable fixed-income debt securities that are classified as available-for-sale.
We have aggregate principal amounts of senior notes of approximately $1.9 billion maturing in June 2026. We intend to utilize the proceeds from the sale of a significant portion of our available-for-sale debt securities to fund the repayment of these notes.
We may from time to time seek to retire or purchase our outstanding debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately negotiated transactions, Rule 10b5-1 plans, or otherwise.
Our long-term debt contains customary representations, covenants, and events of default.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-18 | Frost Diana | Glbl Chief Growth Officer | Sell | -18,502 | $23.05 | -$426,532 |
| 2026-05-12 | CAHILLANE STEVEN A | Chief Executive Officer | Buy | +213,106 | $23.46 | $4,999,808 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-07-29 10-Q expected by 2026-08-06 (in 3 days)
- ~2026-10-28 10-Q expected by 2026-11-05 (in 94 days)
- ~2027-05-05 10-Q expected by 2027-05-13 (in 283 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-18 8-K Officer/Director Change
- 2026-05-29 S-8 Employee Benefit Plan Registration
- 2026-05-21 8-K Material Agreement Entered; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-13 8-K Other Events; Financial Statements and Exhibits
- 2026-05-11 424B2 Prospectus Supplement
- 2026-05-06 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-06 10-Q Quarterly Report
- 2026-02-18 8-K Officer/Director Change
- 2026-02-12 10-K Annual Report
- 2026-02-11 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-20 8-K Other Events; Financial Statements and Exhibits
- 2025-12-16 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-29 10-Q Quarterly Report
- 2025-10-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-22 8-K Officer/Director Change; Regulation FD Disclosure