PITTSBURGH & CHICAGO–(BUSINESS WIRE)–The Kraft Heinz Company (Nasdaq: KHC) today reported financial results for the fourth quarter and full year 2024.
“Although 2024 was a challenging year with our top line results coming in below our expectations, we remained disciplined in protecting profitability while driving industry-leading margins, generating strong cash flow, and returning $2.7 billion in capital to stockholders,” said Kraft Heinz CEO Carlos Abrams-Rivera.
“As we enter 2025, our focus remains on executing with excellence against our strategic pillars, where we know we have the right to win. We will leverage initiatives already set in motion, heading into the year with momentum across product innovation, our Brand Growth System to drive brand superiority, Away From Home new client wins, and incremental distribution points across Emerging Markets. Importantly, we are committed to making the necessary investments to drive top line improvement, while remaining disciplined.”
Abrams-Rivera concluded, “While we have much more work to do, I am confident in our strategy, our people, and our unique ownership-centric culture to drive consistent long-term profitable growth.”
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Net Sales |
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In millions |
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Net Sales |
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Organic Net Sales(1) |
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December 28, 2024 |
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December 30, 2023 |
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% Chg vs PY |
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YoY Growth Rate |
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Price |
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Volume/Mix |
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For the Three Months Ended |
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North America |
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$ |
4,968 |
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$ |
5,167 |
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(3.9)% |
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(3.6)% |
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0.9 pp |
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(4.5) pp |
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International Developed Markets |
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913 |
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948 |
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(3.6)% |
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(4.0)% |
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0.0 pp |
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(4.0) pp |
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Emerging Markets(a) |
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695 |
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745 |
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(6.8)% |
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2.2% |
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4.2 pp |
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(2.0) pp |
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Kraft Heinz |
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$ |
6,576 |
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$ |
6,860 |
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(4.1)% |
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(3.1)% |
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1.0 pp |
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(4.1) pp |
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For the Year Ended |
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North America |
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$ |
19,543 |
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$ |
20,126 |
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(2.9)% |
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(2.8)% |
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1.4 pp |
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(4.2) pp |
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International Developed Markets |
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3,535 |
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3,623 |
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(2.4)% |
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(2.8)% |
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0.0 pp |
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(2.8) pp |
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Emerging Markets(a) |
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2,768 |
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2,891 |
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(4.3)% |
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4.0% |
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3.5 pp |
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0.5 pp |
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Kraft Heinz |
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$ |
25,846 |
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$ |
26,640 |
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(3.0)% |
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(2.1)% |
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1.4 pp |
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(3.5) pp |
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(a) Emerging Markets represents the aggregation of our WEEM and AEM operating segments. |
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Net Income/(Loss) and Diluted EPS |
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In millions, except per share data |
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For the Three Months Ended |
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For the Year Ended |
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December 28, 2024 |
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December 30, 2023 |
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% Chg vs PY |
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December 28, 2024 |
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December 30, 2023 |
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% Chg vs PY |
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Gross profit |
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$ |
2,245 |
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$ |
2,317 |
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(3.1)% |
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$ |
8,968 |
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$ |
8,926 |
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0.5% |
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Operating income/(loss) |
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(40) |
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1,300 |
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(103.1)% |
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1,683 |
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4,572 |
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(63.2)% |
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Net income/(loss) |
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2,132 |
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757 |
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181.7% |
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2,746 |
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2,846 |
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(3.5)% |
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Net income/(loss) attributable to common shareholders |
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2,131 |
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757 |
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181.5% |
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2,744 |
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2,855 |
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(3.9)% |
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Diluted EPS |
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$ |
1.76 |
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$ |
0.61 |
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188.5% |
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$ |
2.26 |
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$ |
2.31 |
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(2.2)% |
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Adjusted EPS(1) |
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0.84 |
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0.78 |
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7.7% |
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3.06 |
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2.98 |
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2.7% |
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Adjusted Operating Income(1) |
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$ |
1,385 |
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$ |
1,389 |
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(0.3)% |
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$ |
5,360 |
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$ |
5,297 |
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1.2% |
FY 2024 Financial Summary
- Net Sales decreased 3.0 percent versus the year-ago period to $25.8 billion, including an unfavorable 0.7 percentage point impact from foreign currency, and a negative 0.2 percentage point impact from divestitures. Organic Net Sales(1) decreased 2.1 percent versus the prior year period. Price increased 1.4 percentage points versus the prior year period, with increases in the North America and Emerging Markets segments, while International Developed Markets was flat. Favorable price was primarily due to pricing taken in certain categories to mitigate higher input costs. Volume/mix declined 3.5 percentage points versus the prior year period, with declines in North America and International Developed Markets, partially offset by volume/mix growth in Emerging Markets. Unfavorable volume/mix was primarily driven by continued shifts in consumer behavior due to economic uncertainty and a decline in Lunchables.
- Operating income/(loss) decreased 63.2 percent versus the year-ago period to $1.7 billion as a result of non-cash impairment losses that were $3.0 billion higher in the current year period. The remaining change to operating income/(loss) was an increase of $118 million due to factors noted in Adjusted Operating Income. Adjusted Operating Income(1) increased 1.2 percent versus the year-ago period to $5.4 billion, primarily driven by higher pricing, lower variable compensation expense, and the beneficial impact from our efficiency initiatives, primarily in procurement and logistics. These factors more than offset unfavorable volume/mix, increased manufacturing expenses due, in part, to increased labor costs, increased SG&A due to investments in technology, and an unfavorable impact from foreign currency (0.4 pp).
- Diluted EPS was $2.26, down 2.2 percent versus the prior year period, primarily driven by higher non-cash impairment losses in the current year period. This more than offset a favorable impact from the tax rate in the current period, driven by the recognition of a $3.0 billion non-U.S. deferred tax asset and associated valuation allowance of $0.6 billion related to the transfer of certain business operations to a wholly-owned subsidiary in the Netherlands. Adjusted EPS(1) was $3.06, up 2.7 percent versus the prior year period, primarily driven by higher Adjusted Operating Income, fewer shares outstanding, and favorable changes in other expense/(income), which more than offset higher taxes on adjusted earnings.
- Net cash provided by/(used for) operating activities was $4.2 billion, up 5.2 percent versus the year-ago period. The increase was primarily due to lapping the prior year cash payments associated with the settlement of the consolidated securities class action lawsuit and the current year conversion of certain assets related to the U.S. postretirement medical plan to cash, which were partially offset by higher cash outflows for variable compensation in the 2024 period compared to the 2023 period and increased cash taxes. Free Cash Flow(1) was $3.2 billion, up 6.6 percent versus the prior year period driven by the same net cash provided by/(used for) operating activities discussed above.
- Capital Return: In fiscal year 2024, the Company paid $1.9 billion in cash dividends and repurchased $988 million of common stock. Of the $988 million in share repurchases in 2024, $800 million were repurchased under the Company’s publicly announced share repurchase program and $188 million were purchased to offset the dilutive effect of equity-based compensation. As of Dec. 29, 2024, the Company had remaining authorization to repurchase approximately $1.9 billion of common stock under the publicly announced share repurchase program.
Q4 2024 Financial Summary
- Net sales decreased 4.1 percent versus the year-ago period to $6.6 billion, including a negative 0.8 percentage point impact from foreign currency, and a negative 0.2 percentage point impact from divestitures. Organic Net Sales(1) decreased 3.1 percent versus the prior year period. Price increased 1.0 percentage points versus the prior year period, driven by increases in the North America and Emerging Markets segments, with flat pricing in International Developed Markets. Favorable price was primarily due to pricing taken in certain categories to mitigate higher input costs. Volume/mix declined 4.1 percentage points versus the prior year period, with declines in each reportable segment. Unfavorable volume/mix was primarily driven by continued shifts in consumer behavior due to economic uncertainty and a decline in U.S. Away From Home.
- Operating Income decreased 103.1 percent versus the year-ago period to $(40) million as a result of non-cash impairment losses of $1.4 billion in the current year period. This impairment charge was largely due to an intangible asset impairment on the Oscar Mayer brand. The remaining change to operating income/(loss) was an increase of $47 million driven by higher unrealized losses on commodity hedges in the prior year. Adjusted Operating Income(1) decreased 0.3 percent versus the year-ago period to $1.4 billion, primarily driven by unfavorable volume/mix, increased expenses in procurement and manufacturing due, in part, to increased labor costs, and an unfavorable impact from foreign currency (0.2 pp). These factors were partially offset by lower variable compensation expense, higher pricing, and the beneficial impact from our efficiency initiatives, primarily in procurement.
- Diluted EPS was $1.76, up 188.5 percent versus the prior year period, primarily driven by the recognition of a $3.0 billion non-U.S. deferred tax asset and associated valuation allowance of $0.6 billion related to the transfer of certain business operations to a wholly-owned subsidiary in the Netherlands. Adjusted EPS(1) was $0.84, up 7.7 percent versus the prior year period, primarily driven by lower taxes on adjusted earnings and fewer shares outstanding.
Outlook
For fiscal year 2025, the Company expects:
- Organic Net Sales(1)(2) flat to down 2.5 percent versus the prior year. The Company expects sequential improvement in Organic Net Sales throughout each quarter in 2025, with a flat to slightly positive contribution from price throughout the year.
- Constant Currency Adjusted Operating Income(1)(2) down 1 percent to down 4 percent versus the prior year. This includes the impact of lapping lower variable compensation in 2024, which is an approximate 210 basis point headwind. This also contemplates an Adjusted Gross Profit Margin(1)(2) that is expected to be flat to slightly expand versus the prior year.
- Adjusted EPS(1)(2) in the range of $2.63 to $2.74. The Company expects an effective tax rate on Adjusted EPS to be approximately 26 percent, which reflects an approximate $0.23 cent headwind year-over-year. This increase in the effective tax rate is primarily driven by the impact of several countries enacting the global minimum tax regulations, partially offset by the annual benefit related to the transfer of certain business operations completed in the fourth quarter of 2024. Additionally, the Company expects interest expense to be approximately $900 million and other expense/(income) to be approximately ($140) million for the full year. This guidance does not reflect any impact from future potential share repurchases.
- Free Cash Flow(1)(2) flat versus the prior year, with Free Cash Flow Conversion(1)(2) of approximately 95 percent. This is driven by working capital efficiencies and lower cash outflows for variable compensation, partially offset by a higher cash tax primarily driven by the impact of several countries enacting the global minimum tax regulations.
End Notes
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(1) |
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Organic Net Sales, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Operating Income, Constant Currency Adjusted Operating Income, Adjusted EBITDA, Adjusted EPS, Free Cash Flow, Free Cash Flow Conversion, and Net Leverage are non-GAAP financial measures. Please see discussion of non-GAAP financial measures and the reconciliations at the end of this press release for more information. |
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(2) |
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Guidance for Organic Net Sales, Adjusted Gross Profit Margin, Constant Currency Adjusted Operating Income, Adjusted EPS, Free Cash Flow, and Free Cash Flow Conversion is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of such items impacting comparability, including, but not limited to, the impact of currency, acquisitions and divestitures, divestiture-related license income, restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, equity award compensation expense, nonmonetary currency devaluation, and debt prepayment and extinguishment (benefit)/costs, among other items. Therefore, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation of these measures without unreasonable effort. |
ABOUT THE KRAFT HEINZ COMPANY
We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious. Consumers are at the center of everything we do. With 2024 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of eight consumer-driven product platforms. As global citizens, we’re dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways. Learn more about our journey by visiting www.kraftheinzcompany.com or following us on LinkedIn.
