Kraft Heinz (NASDAQ:KHC) said second-quarter results came in ahead of its expectations, prompting the food company to raise its full-year outlook for organic net sales while increasing planned 2026 investments by $100 million to approximately $700 million.
Chief Executive Officer Steve Cahillane said the company’s performance reflected better-than-expected results in U.S. retail, global away-from-home operations and emerging markets. He said Kraft Heinz is accelerating investment because early results from its brand, pricing, innovation and marketing programs have been encouraging.
Second-Quarter Results
Organic net sales declined 1.3% during the second quarter. Price contributed 1.3 percentage points, while volume and mix declined 2.6 percentage points. The company said results included a roughly 100-basis-point headwind from the timing of Easter.
Adjusted gross profit margin was flat from a year earlier as productivity initiatives and pricing offset inflationary pressures. Constant-currency adjusted operating income fell 18.4%, while adjusted operating income margin declined 350 basis points. The decline reflected increased marketing investment, which accounted for more than 8 percentage points of the operating-income decline, and higher variable compensation expense, which accounted for nearly 7 percentage points.
Adjusted earnings per share were $0.56, down about $0.13, or 18.8%, from the second quarter of 2025. Kraft Heinz also recorded a non-cash impairment charge of $7.4 billion during the quarter.
Year-to-date free cash flow totaled approximately $1.7 billion, up 10% from the prior year. Free-cash-flow conversion reached 123%, an increase of 27 percentage points, driven largely by working-capital improvements related to payables. CFO Andre Maciel said free cash flow also benefited from marketing accruals, with the cash impact expected in subsequent quarters.
Regional Performance and Share Trends
North America organic net sales declined 2.7% from a year earlier. Growth in Canada and the away-from-home business was offset by lower U.S. retail sales, primarily in meats. Maciel said U.S. retail results also benefited from customer inventory pull-forwards tied to summer grilling and Fourth of July activations, estimated at roughly 80 basis points for total company sales.
International Developed Markets organic net sales fell 0.7%, reflecting market-share pressure after customer negotiations in select regions and promotional timing. Those pressures were partly offset by growth in Benelux and the U.K., where Kraft Heinz gained share.
Emerging Markets organic net sales increased 8.5%, supported by both price and volume/mix. Growth across most countries was partly offset by a roughly 100-basis-point impact from declines in Indonesia. The company expects emerging-markets growth to accelerate in the second half after fully lapping the Indonesia headwind by the third quarter.
Kraft Heinz said the percentage of its revenue gaining or holding share rose to 36% year to date, from 21% in 2025. In its “win big” portfolio, 45% of revenue was gaining or holding share year to date. The Heinz brand gained or held share across market and category combinations representing more than 70% of its revenue, Cahillane said.
In U.S. retail, the portion of revenue gaining or holding share improved to 30% year to date from 12% at the end of 2025. The company cited progress in Taste Elevation, hydration and dessert categories, while acknowledging continuing declines in meats and meals. Kraft Heinz is targeting price, product and packaging investments for Oscar Mayer and increasing innovation and media support for Kraft Mac & Cheese.
Investment, Innovation and International Growth
Marketing spending is expected to reach at least 6% of net sales for the full year. Marketing expense rose about 36% during the first half, while research-and-development spending increased 22%. The company said global return on ad spend improved by 6 percentage points based on its latest data, while promotional-spending return on investment increased 3.4 percentage points year to date.
Kraft Heinz highlighted several recent launches, including Kraft Mac & Cheese PowerMac, which reached distribution in more than 35,000 stores. Cahillane said initial velocities were in the top quartile and that sales appeared highly incremental to the base business and broader category. Capri Sun Hydrate has become the fastest-turning innovation in kids’ single-serve beverages, according to the company, while Philadelphia Lactose Free cream cheese has begun shipping to customers.
Internationally, Heinz sales grew approximately 12% in emerging markets during the quarter. The company also reported a roughly 4% increase in distribution points in those markets. Global away-from-home organic net sales increased 2.9%, aided by a return to growth in the U.S. and continued emerging-markets growth. The company said U.S. away-from-home sales received an approximately 150-basis-point benefit from World Cup-driven demand and lapping a prior-year inventory reduction; it does not expect those benefits to recur.
Updated 2026 Outlook
Kraft Heinz raised its full-year organic net sales outlook to a decline of 2% to 0.5%, compared with its prior forecast for a decline of 3.5% to 1.5%. The outlook continues to include an estimated 100-basis-point headwind from lower SNAP benefits.
- Adjusted gross profit margin is now expected to decline 50 basis points to 10 basis points, an improvement from the prior outlook for a 75-basis-point to 25-basis-point decline.
- Constant-currency adjusted operating income is expected to decline 18% to 16%, compared with the prior range of down 18% to 14%.
- Adjusted EPS is forecast at $2.03 to $2.09, versus the prior range of $1.98 to $2.10.
- Free-cash-flow conversion is expected to be approximately 110%, up from the previous expectation of 100%.
For the third quarter, the company expects organic net sales to decline 2.5% to 1%. It expects the second-quarter inventory pull-forward to create an approximately 80-basis-point headwind to consolidated results, alongside a promotional-timing headwind as investments increase. Adjusted operating income is projected to decline 25% to 23% in the third quarter, primarily because of the further step-up in investments.
Maciel said Kraft Heinz expects full-year inflation to be slightly above 4%, with inflation peaking heading into the fourth quarter. The company delivered more than $330 million in gross efficiencies year to date, representing at least 4% of cost of goods sold, and expects to maintain that pace through the remainder of the year.
About Kraft Heinz (NASDAQ:KHC)
The Kraft Heinz Company (NASDAQ: KHC) is a global food and beverage company formed in 2015 through the merger of Kraft Foods Group and H.J. Heinz Company. The combination created one of the largest packaged-food companies in the world, built around well-known consumer brands. The merger was supported by major investors and established a multi-national platform for branded food products.
Kraft Heinz develops, manufactures, markets and distributes a broad portfolio of branded packaged foods and condiments.
