The Kraft Heinz Company ((KHC Quick QuoteKHC - Free Report) ) posted third-quarter 2025 results, wherein the top and bottom lines declined year over year, primarily due to weaker volumes in key categories. However, management emphasized steady progress in productivity initiatives, brand investments and preparation for its planned separation into two standalone public companies.

The company continues to focus on delivering affordable and high-quality products through its Brand Growth System. Ongoing investments in marketing, R&D, and manufacturing are designed to enhance consumer connection and portfolio strength. These efforts, along with its cost-efficiency initiatives and robust cash generation, remain central to Kraft Heinz’s long-term value creation strategy.

Kraft Heinz remains committed to maintaining financial discipline, optimizing its capital structure and returning value to shareholders while executing its separation into “Global Taste Elevation Co.” and “North American Grocery Co.” in the second half of 2026.

KHC’s Quarterly Performance: Key Insights

Kraft Heinz posted adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate of 57 cents. However, quarterly earnings fell 18.7% year over year, mainly due to lower adjusted operating income, increased taxes on adjusted earnings and higher interest costs.

The company generated net sales of $6,237 million, down 2.3% year over year. The metric fell short of the Zacks Consensus Estimate of $6,247 million. Net sales included a slight 0.2 percentage point or pp benefit from favorable foreign currency exchange rates. Organic net sales were down 2.5% year over year. Our model expected a 2.3% dip in organic sales.

Pricing rose by 1 pp across all reportable segments, primarily due to strategic price increases in certain categories — most notably coffee — to negate higher input costs. However, this was outweighed by a 3.5 pp decline in volume/mix, driven mainly by lower volumes in North America and International Developed Markets. These declines were partially offset by volume/mix gains in Emerging Markets. The adverse volume/mix was mainly attributed to declines in cold cuts, coffee, certain condiments, frozen snacks and Indonesia.

The adjusted gross profit of $2,015 million decreased from the $2,189 million reported in the year-ago quarter. The adjusted gross margin contracted 200 bps to 32.3%. We had expected an adjusted gross margin decline of 140 bps to 32.9%.

Adjusted operating income fell 16.9% year over year to $1,106 million, primarily due to commodity and manufacturing cost inflation, which outweighed gains from efficiency initiatives. Adverse volume/mix, and higher selling, general and administrative expenses (mainly due to reduced advertising) also led to the decline, partly compensated by greater pricing and a modest 0.1 pp benefit from foreign currency movements.

Decoding KHC’s Segment-Wise Results

North America: Net sales of $4,641 million declined 3.8% year over year. Organic sales also fell 3.8%. We expected a 3.5% decrease in segment organic sales. During the quarter, pricing moved up 0.4 pp, but the volume/mix fell 4.2 pp.

International Developed Markets: Net sales of $895 million were up 1.6% year over year. Organic sales declined 1.4%, with pricing moving up 1 pp and volume/mix dipping 2.4 pp. We expected a 2.2% drop in segment organic sales.

Emerging Markets: Net sales of $701 million increased 3.8% year over year. Also, organic sales grew 4.7%. Pricing went up 4 pp, and volume/mix increased 0.7 pp.

Kraft Heinz: Other Financial Aspects

Kraft Heinz ended the quarter with cash and cash equivalents of $2,114 million, long-term debt of $19,287 billion and total shareholders’ equity (excluding noncontrolling interest) of $41,450 million. Net cash provided by operating activities was $3,086 million for the nine months ended Sept. 27, 2025, and free cash flow was $2,490 million.

During the year-to-date period, Kraft Heinz paid cash dividends worth $1.4 billion and made share buybacks worth $435 million. As of Sept. 27, 2025, the company had shares worth $1.5 billion remaining under its buyback plan.

What to Expect From KHC in 2025?

This Zacks Rank #4 (Sell) company updated its full-year 2025 outlook to reflect near-term market softness. Management now expects organic net sales to decline 3% to 3.5% compared with the previous range of down 1.5% to 3.5%. This reflects expectations of softer growth in Emerging Markets, stemming from ongoing weakness in Indonesia and continued pressure within U.S. retail channels.

Constant-currency adjusted operating income is expected to fall 10% to 12% compared with the earlier 5% to 10% decline. The company now forecasts an adjusted gross profit margin decline of approximately 100 basis points for the year.

Adjusted EPS is projected in the range of $2.50-$2.57 compared with the previous outlook of $2.51 to $2.67. Management continues to expect an effective tax rate of about 26% and interest expenses of nearly $950 million.

KHC shares have lost 10.4% in the past three months compared with the industry’s decline of 6.2%.

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