second quarter of 2026
Filed Aug 5, 2026KRAFT HEINZ REPORTS SECOND QUARTER 2026 RESULTS; UPDATES 2026 FULL YEAR OUTLOOK
Organic Net Sales decreased 1.3% and Adjusted Operating Income decreased 18.4%, while Emerging Markets grew and year-to-date Free Cash Flow increased 10.3%. The reported GAAP operating loss of $6.4 billion was driven by $7.4 billion of non-cash impairment losses.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net SalesGAAP | $6,262 million | – | (1.4)% |
| Organic Net Salesnon-GAAP | (1.3)% | – | (1.3)% |
| Priceother | 1.3 pp | – | 1.3 pp |
| Volume/Mixother | (2.6) pp | – | (2.6) pp |
| Gross profitGAAP | $2,028 million | – | (7.1)% |
| Gross profit marginGAAP | 32.4% | – | decreased 200 basis points |
| Adjusted Gross Profit Marginnon-GAAP | 34.1% | – | flat |
| Operating income/(loss)GAAP | $(6,431) million | – | 19.4% |
| Non-cash impairment lossesother | $7.4 billion | – | $1.9 billion lower |
| Adjusted Operating Incomenon-GAAP | $1,041 million | – | (18.4)% |
| Net income/(loss)GAAP | $(5,460) million | – | 30.2% |
| Net income/(loss) attributable to common shareholdersGAAP | $(5,460) million | – | 30.2% |
| Diluted EPSGAAP | $(4.60) | – | 30.3% |
| Adjusted EPSnon-GAAP | 0.56 | – | (18.8)% |
| Six-month Net SalesGAAP | $12,309 million | – | (0.3)% |
| Six-month Organic Net Salesnon-GAAP | (0.9)% | – | (0.9)% |
| Six-month gross profitGAAP | $4,247 million | – | — % |
| Six-month operating income/(loss)GAAP | $(5,286) million | – | 22.0% |
| Six-month net income/(loss)GAAP | $(4,661) million | – | 34.4% |
| Six-month net income/(loss) attributable to common shareholdersGAAP | $(4,662) million | – | 34.4% |
| Six-month Diluted EPSGAAP | $(3.93) | – | 34.3% |
| Six-month Adjusted EPSnon-GAAP | 1.14 | – | (13.0)% |
| Six-month Adjusted Operating Incomenon-GAAP | $2,099 million | – | (15.2)% |
| Year-to-date net cash provided by/(used for) operating activitiesGAAP | $2.1 billion | – | 8.2% |
| Year-to-date Free Cash Flownon-GAAP | $1.7 billion | – | 10.3% |
| Year-to-date Free Cash Flow Conversionnon-GAAP | 123% | – | increased 27pp |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| North AmericaOrganic Net Sales decreased 2.7%; price was 1.1 pp and volume/mix was (3.8) pp. | $4,626 million | – | (2.7)% |
| International Developed MarketsOrganic Net Sales decreased 0.7%; price was 0.7 pp and volume/mix was (1.4) pp. | $865 million | – | (3.5)% |
| Emerging MarketsOrganic Net Sales increased 8.5%; price was 4.5 pp and volume/mix was 4.0 pp. | $771 million | – | 10.4% |
fiscal year 2026 outlook
- RevenueOrganic Net Sales down 0.5 percent to down 2.0 percent versus the prior year
- Gross marginAdjusted Gross Profit Margin expected to be down 10 basis points to down 50 basis points versus the prior year
- Tax rateeffective tax rate on Adjusted EPS of approximately 24.5 percent
- NoteConstant Currency Adjusted Operating Income down 16 percent to down 18 percent versus the prior year
- Noteincremental investments of approximately $700 million compared to 2025
- Notean approximate 500 basis-point headwind from lapping lower incentive compensation
- NoteAdjusted EPS in the range of $2.03 to $2.09
- Noteinterest expense of approximately $890 million
- Noteother expense/(income) of approximately $200 million of income
- NoteFree Cash Flow Conversion of approximately 110 percent
- Noteapproximate 100 basis point impact from incremental SNAP headwinds
Capital returns
- Year to date, the Company has paid $949 million in cash dividends.
- The Company did not repurchase any shares under its publicly announced share repurchase program.
- Year-to-date return of capital to stockholders was $0.9 billion.
What drove it
- Price increased 1.3 percentage points, with increases in each segment, primarily reflecting pricing in certain categories to mitigate higher input costs, primarily in coffee and ready-to-drink beverages.
- Volume/mix declined 2.6 percentage points, primarily driven by declines in meats and spoonables and a shift in Easter timing, which had an approximate 100 basis point impact.
- Inventory pull forward provided an approximate 80 basis point benefit in the quarter.
- Emerging Markets volume/mix growth partially offset volume/mix declines in North America and International Developed Markets.
- Adjusted Operating Income was supported by efficiency initiatives and higher price.
Concerns
- Net sales decreased 1.4% and Organic Net Sales decreased 1.3%.
- Adjusted Operating Income decreased 18.4% to $1.0 billion, reflecting increased advertising expenses, unfavorable volume/mix, inflationary pressures in manufacturing and logistics costs, and higher variable compensation expense.
- GAAP operating income was a loss of $6.4 billion, driven by non-cash impairment losses of $7.4 billion.
- The fiscal 2026 outlook includes an approximate 100 basis point impact from incremental SNAP headwinds.
- The Constant Currency Adjusted Operating Income outlook contemplates an approximate 500 basis-point headwind from lapping lower incentive compensation.
What to watch
- Whether North America and International Developed Markets volume/mix declines improve from (3.8) pp and (1.4) pp, respectively.
- Execution of approximately $700 million of incremental investments in 2026.
- Progress toward the fiscal 2026 Organic Net Sales outlook of down 0.5 percent to down 2.0 percent versus the prior year.
- Delivery of Adjusted EPS of $2.03 to $2.09 and Free Cash Flow Conversion of approximately 110 percent.
- The effect of incremental SNAP headwinds, manufacturing and logistics inflation, and the lapping of lower incentive compensation.
Balance sheet and cash flow
- Year-to-date net cash provided by/(used for) operating activities was $2.1 billion, up 8.2%.
- Year-to-date Free Cash Flow was $1.7 billion, up 10.3%.
- Year-to-date Free Cash Flow Conversion was 123%, increased 27pp.
- Cash-flow improvement was driven by favorable changes in working capital, primarily within accounts payable, due in part to improved payments terms, partially offset by increases in inventory.
Analysis
Second-quarter sales performance remained soft at the consolidated level. Net Sales decreased 1.4% to $6,262 million and Organic Net Sales decreased 1.3%. Price increased 1.3 pp, but this did not offset a (2.6) pp volume/mix decline. The company attributed the volume/mix pressure principally to meats, spoonables, and a shift in Easter timing, while inventory pull forward provided an approximate 80 basis point benefit in the quarter.
The segment mix was uneven. North America reported Net Sales of $4,626 million, down 2.7%, with volume/mix down (3.8) pp. International Developed Markets reported Net Sales of $865 million, down 3.5%, although Organic Net Sales declined 0.7%. Emerging Markets was the clear growth segment, with Net Sales of $771 million, up 10.4%, Organic Net Sales growth of 8.5%, and volume/mix growth of 4.0 pp.
Profitability deteriorated on an adjusted basis despite stable Adjusted Gross Profit Margin of 34.1%. Gross profit margin decreased 200 basis points to 32.4%, and Adjusted Operating Income decreased 18.4% to $1,041 million. The company cited higher advertising expense, unfavorable volume/mix, manufacturing and logistics inflation, and higher variable compensation expense, which more than offset efficiency initiatives and higher price. The GAAP operating loss of $(6,431) million reflected $7.4 billion of non-cash impairment losses, while the smaller loss versus the prior year drove the 30.3% improvement in Diluted EPS to $(4.60).
Cash generation improved year to date despite the adjusted-profit decline. Net cash provided by operating activities was $2.1 billion, up 8.2%, and Free Cash Flow was $1.7 billion, up 10.3%. Working-capital benefits, principally in accounts payable and improved payment terms, supported cash flow, partly offset by inventory increases. The company paid $949 million in cash dividends year to date and did not repurchase shares under its publicly announced share repurchase program.
For fiscal 2026, management updated its outlook and expects Organic Net Sales to decline by 0.5 percent to 2.0 percent, including an approximate 100 basis point impact from incremental SNAP headwinds. It expects Constant Currency Adjusted Operating Income to decline by 16 percent to 18 percent, with approximately $700 million of incremental investments and an approximate 500 basis-point headwind from lapping lower incentive compensation. Adjusted EPS is expected to be $2.03 to $2.09 and Free Cash Flow Conversion approximately 110 percent.
Management, verbatim
We delivered another solid quarter, with results that exceeded our expectations across U.S. Retail, Global Away From Home, and Emerging Markets.
Steve Cahillane, CEO of Kraft Heinz
The progress we are seeing gives us the confidence to raise our Organic Net Sales outlook for the year.
Steve Cahillane, CEO of Kraft Heinz
By accelerating these investments, we position the business even more favorably as we enter 2027.
Steve Cahillane, CEO of Kraft Heinz
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported financial metrics
- Quarterly net cash provided by/(used for) operating activities
- Quarterly Free Cash Flow
- Prior-year dollar amounts for year-to-date operating cash flow and Free Cash Flow
- Cash balance
- Debt balance
- Net leverage value
- GAAP effective tax rate
- Operating expenses
- Share repurchase dollar amount
- Quantified segment operating income or profitability
- GAAP reconciliations for full-year non-GAAP guidance
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.