TenQ

The Kraft Heinz story

Kraft Heinz makes Heinz ketchup, Kraft cheese and other packaged foods, with its planned split paused as higher brand spending seeks to restore volume growth.

Written from Kraft Heinz's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $23.56share price, last close
  • $27.9Bmarket value
  • 13/36TenQ Score checks passed
  • -7.2%growth a year the price assumes

The story in brief

  • Prices cannot offset volume. In the quarter to June 2026, organic net sales decreased 1.3 percent as price increases of 1.3 percentage points were outweighed by a 2.6 percentage point decline in volume/mix.
  • Losses extend beyond impairments. In the quarter to June 2026, non-cash impairment losses of $7.4 billion drove a $6.4 billion operating loss, while adjusted operating income fell 18.4 percent to $1.0 billion.
  • Cash generation improved. Over the first half of 2026, free cash flow increased 10.3 percent to $1.7 billion, helped by favorable working capital changes, while cash dividends totaled $949 million.

What drives the business

  • Kraft Heinz’s portfolio spans Heinz condiments, Philadelphia, Kraft Mac & Cheese, Oscar Mayer and Lunchables, generating approximately $25 billion in net sales in 2025.
  • The separation announced in September 2025 would divide Global Taste Elevation Co., with approximately $15.4 billion in 2024 net sales, from North American Grocery Co., with approximately $10.4 billion, but the board paused work in February 2026.
  • Walmart accounted for approximately 21% of net sales in 2025, 2024, and 2023, making the retailer a major route to consumers across both reportable segments.
  • Brand licensing also shapes the portfolio, including Capri Sun drink pouches in North America and perpetual licenses granted to an affiliate of Groupe Lactalis for certain Kraft and Velveeta cheese products.
  • North America and International Developed Markets are the reportable segments, while Emerging Markets combines the remaining operations and delivered 8.5 percent organic growth in the quarter to June 2026, contrasting with declines in the developed markets.

What the price assumes

At $23.56, the reverse DCF implies annual growth of -7.2% in free cash flow after stock pay for ten years, using a 10.2% discount rate.

That assumption describes shrinking cash generation, compared with delivered growth of 10.0% a year over the last 10 years and the TenQ check’s 7.0% growth bar.

Free cash flow over the last twelve months was $3.8 billion, with a 13.7% yield, even as revenue growth was -1.6%.

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What could change the story

  • Higher advertising spending, unfavorable volume/mix, manufacturing and logistics inflation, and higher variable compensation reduced adjusted operating income in the quarter to June 2026 despite efficiency gains and higher prices.
  • Organic sales in that period benefited by approximately 80 basis points from inventory pulled forward, so the reported decline does not reflect demand alone.
  • The first half of 2026 cash improvement depended partly on accounts payable and improved payment terms rather than earnings growth, leaving its durability an important question.
  • Total debt of $17.6 billion against $2.7 billion in cash and short-term investments leaves debt service competing with investment and dividends, while the TenQ checks for near-term liquidity and earnings coverage of interest fail.
  • Further goodwill or brand impairments could deepen reported losses, and any resumed separation would still require board approval, favorable tax opinions and effective SEC filings.

What to watch next

  • The next releases will show whether North American volume/mix improves as incremental investments reach approximately $700 million for fiscal year 2026.
  • Management expects fiscal year 2026 organic net sales to be down 0.5 percent to down 2.0 percent, including an approximate 100 basis point impact from incremental SNAP headwinds.
  • The profit comparison is constant currency adjusted operating income down 16 percent to down 18 percent, alongside adjusted EPS of $2.03 to $2.09.
  • Free cash flow conversion against guidance of approximately 110 percent, together with accounts payable and inventory movements, will help distinguish sustained cash generation from working capital timing.

Sources

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