Kraft Heinz beats expectations for the 2nd quarter as home-cooking rises

Fast Company

6 days ago

Kraft Heinz beat estimates for quarterly results on Wednesday, helped by resilient demand for its pantry staples and condiments in the United States as consumers tried to stretch their household budgets.
A mix of sticky inflation and heightened economic uncertainty has forced consumers to cook more affordable meals at home instead of eating out. People prioritizing protein in their diets has also boosted demand for Kraft Heinz's steak sauce and Worcestershire sauce.
The company's board is 'working with urgency' to evaluate strategic options for some brands, executives said on a post-earnings call, following media reports earlier this month that it was exploring a spin-off of the grocery business.
Kraft Heinz recorded a $9.3 billion impairment charge in the second quarter due to a steady decline in its market capitalization to $33.8 billion, with the stock value dropping about 30% since 2022.
The company reiterated its annual targets and now expects a cost impact of about 100 basis points this year from President Donald Trump's tariffs.
Its shares were up 1% in early trade.
The Philadelphia Cream Cheese maker has worked on introducing healthier options in some categories such as desserts to capture consumer demand, and has said it would remove food dyes from its portfolio.
It also announced plans to change the packaging for Kraft Mayonnaise to highlight the absence of dyes and artificial flavors, weeks after snacks giant PepsiCo said it will rebrand its Lay's and Tostitos chips without those substances.
While Kraft Heinz's quarterly volumes fell about 2.7 percentage points due to some weakness in categories such as coffee, cold meat cuts and ready-to-eat meals, the decline was lower than the prior quarter's drop of 5.6 percentage points.
In North America, its biggest market by revenue, volumes fell 3.4 percentage points.
'Looking ahead, we continue to expect growth in our international business, but we are not contemplating an improvement in the U.S. industry for the rest of 2025,' CEO Carlos Abrams-Rivera said in a statement.
With consumers seeking value, the company has been investing in promotions, and that, along with inflation, could pressure margins in the current quarter, said Arun Sundaram, analyst at CFRA Research.
Net sales for the three months ended June 28 came in at $6.35 billion, beating analysts' average estimate of $6.26 billion, according to data compiled by LSEG.