KHC · The Kraft Heinz Company

The Kraft Heinz Company reported first quarter 2026 results showing modest top-line growth with net sales up 0.8% to $6,047 million, driven by 0.8 pp pricing to offset input costs, though organic net sales declined 0.4% from a 1.2 pp volume/mix drop in categories like coffee, cold cuts, and Indonesia, partially mitigated by Easter timing shifts. Segment performance varied: North America sales fell 0.7% with organic down 1.1%, International Developed Markets rose 3.2% but organic flat, and Emerging Markets grew 7.6% with 3.8% organic growth. Gross profit margin expanded 230 basis points to 36.7% on favorable procurement recoveries and pricing, but adjusted margin dipped 30 bps to 34.1%. Operating income declined 4.3% to $1.1 billion due to higher advertising, manufacturing/logistics inflation outpacing efficiencies, separation and restructuring costs, offset by pricing and hedge gains; adjusted operating income fell 11.8% from similar pressures and volume/mix. Diluted EPS rose 13.6% to $0.67 on lower taxes and other income, while adjusted EPS dropped 6.5% to $0.58. Cash generation strengthened significantly with operating cash flow up 39.7% to $1.0 billion and free cash flow up 58.9% to $0.8 billion at 111% conversion, aided by working capital optimization and supplier terms. Capital returns included $474 million in dividends, with $1.5 billion repurchase authorization remaining. Management, led by CEO Steve Cahillane, highlighted progress from 2025 investments driving market share gains in Taste Elevation, focus on U.S. turnaround, international acceleration, and $600 million incremental investments. The company reaffirmed its full-year 2026 outlook amid volatile inflation and low consumer sentiment, expecting organic sales down 1.5-3.5% (including SNAP headwinds), constant currency adjusted operating income down 14-18% with margin contraction of 25-75 bps, adjusted EPS $1.98-$2.10, and 100% free cash flow conversion.