Kraft Heinz’s second quarter drew a negative market response, as investors focused on continued sales declines and a sizeable impairment charge despite the company beating Wall Street’s revenue and profit expectations. Management attributed the quarter’s results to ongoing investments in product quality, marketing, and manufacturing, though North American retail volume trends remained subdued. CEO Carlos Abrams-Rivera acknowledged that the company is “actively progressing” on a review of strategic options to unlock value but provided no new details. CFO Andre Maciel noted that a sustained share price decline triggered a $9.3 billion impairment, emphasizing it was not tied to operational performance.
Is now the time to buy KHC? Find out in our full research report (it’s free).
Kraft Heinz (KHC) Q2 CY2025 Highlights:
- Revenue: $6.35 billion vs analyst estimates of $6.27 billion (1.9% year-on-year decline, 1.2% beat)
- Adjusted EPS: $0.69 vs analyst estimates of $0.64 (8.4% beat)
- Adjusted EBITDA: $1.54 billion vs analyst estimates of $1.47 billion (24.3% margin, 4.9% beat)
- Management reiterated its full-year Adjusted EPS guidance of $2.59 at the midpoint
- Operating Margin: -126%, down from 8.1% in the same quarter last year
- Organic Revenue fell 2% year on year vs analyst estimates of 3% declines (101.2 basis point beat)
- Sales Volumes fell 2.7% year on year, in line with the same quarter last year
- Market Capitalization: $32.37 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kraft Heinz’s Q2 Earnings Call
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Andrew Lazar (Barclays) asked about the strategic review and whether potential business separations may amount to mere "financial engineering." CEO Carlos Abrams-Rivera reiterated the focus on long-term value and financial discipline, declining to discuss details.
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Peter Galbo (Bank of America) inquired about the large impairment charge and whether it related to strategic transaction planning. CFO Andre Maciel clarified it was triggered solely by share price declines and did not reflect business performance or reporting changes.
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David Palmer (Evercore ISI) pressed on pricing and promotional strategy in the context of inflation and private label competition. Abrams-Rivera said pricing was being kept well below inflation, and incremental marketing spend was targeted for launches and renovations.
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Leah Jordan (Goldman Sachs) asked about emerging markets sales trends and the sustainability of double-digit exit rates. Abrams-Rivera pointed to strength in the Heinz brand and a simplified product portfolio as drivers of confidence.
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Alexia Howard (Bernstein Research) questioned the pace of innovation relative to peers and how quickly it could ramp up. Abrams-Rivera explained that innovation as a percentage of sales had doubled since 2022 and should continue to increase as more brands adopt the Brand Growth System.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) updates on the company’s strategic review and any potential business separations or restructurings, (2) evidence of stabilization or improvement in North American retail volumes as new products and marketing initiatives take effect, and (3) sustained double-digit growth and margin expansion in emerging markets. Progress on mitigating inflation and tariff impacts will also be a critical area of focus.
Kraft Heinz currently trades at $27.34, down from $28.60 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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