Kraft Heinz Q2 Earnings Beat Estimates Despite Organic Sales Dip

Kraft Heinz posted adjusted earnings of 56 cents per share, beating the Zacks Consensus Estimate of 53 cents. Quarterly adjusted earnings fell 18.8% year over year, mainly due to lower adjusted operating income, partially offset by reduced tax expenses.

The company generated net sales of $6,262 million, down 1.4% year over year. However, the metric beat the Zacks Consensus Estimate of $6,162 million. The decrease included a 0.6 percentage-point drag from divestitures partially offset by a favorable 0.5 percentage-point impact from foreign currency. Organic net sales fell 1.3%. Our model expected a 3.8% dip in organic sales.

Price contributed 1.3 percentage points of growth, with increases across all segments, primarily reflecting pricing actions in select categories to offset higher input costs, particularly in coffee and ready-to-drink beverages.

Volume/mix declined 2.6 percentage points, driven by lower volumes in the North America and International Developed Markets segments, partly offset by growth in the Emerging Markets segment. The volume/mix decline was primarily attributable to weaker performance in meats and spoonables, along with the timing shift of Easter, which reduced growth approximately 100 basis points. These headwinds were partially offset by an approximately 80 basis point benefit from inventory pull-forward in the quarter.

The adjusted gross profit of $2,136 million decreased from the $2,168 million reported in the year-ago quarter. Adjusted gross profit margin was flat year over year at 34.1%. We expected an adjusted gross margin decline of 40 bps to 33.7%.

Adjusted operating income declined 18.4% year over year to $1,041 million. The drop was primarily caused by higher advertising expenses, unfavorable volume/mix, inflationary pressures in manufacturing and logistics and higher variable compensation expense. These headwinds more than offset the benefits from higher pricing and efficiency initiatives.

Decoding KHC’s Segment-Wise Results

North America net sales declined 2.7% to $4,626 million. Organic sales also fell 2.7%, as a 1.1-percentage-point pricing contribution was outweighed by a 3.8-percentage-point volume/mix decline. We expected a 5.3% decline in segment organic sales.

International Developed Markets sales decreased 3.5% to $865 million, while organic sales slipped 0.7% as a 0.7-percentage-point pricing contribution was outweighed by a 1.4-percentage-point volume/mix decline. We expected a 1.4% decrease in segment organic sales. 

Emerging Markets sales rose 10.4% to $771 million, and organic sales advanced 8.5%, driven by 4.5-percentage-point pricing and 4-percentage-point volume/mix contributions. We expected 3.6% growth in segment organic sales.

Kraft Heinz: Other Financial Aspects

Kraft Heinz ended the quarter with cash and cash equivalents of $2,419 million, long-term debt of $17,619 million and total shareholders’ equity (excluding noncontrolling interest) of $36,006 million. Net cash provided by operating activities was $2,088 million for the six months ended June 27, 2026, and free cash flow was $1,659 million.

The company returned $949 million to its shareholders through cash dividends in the first half. Kraft Heinz did not repurchase any shares under its existing buyback program.

What to Expect From KHC in 2026?

For 2026, Kraft Heinz now expects organic net sales to decline 0.5-2%, compared with its previous forecast for a 1.5-3.5% drop. The outlook continues to include an estimated 100-basis-point headwind from lower SNAP benefits.

Constant-currency adjusted operating income is now projected to fall 16-18%, compared with the prior range of 14-18% decrease. 

Adjusted earnings are expected between $2.03 and $2.09 per share, compared with the previous range of $1.98-$2.10.

Shares of this Zacks Rank #2 (Buy) company have gained 18.2% in the past three months compared with the industry’s growth of 6.1%.

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The consensus estimate for Darling Ingredients’ current fiscal-year sales and earnings implies growth of 13.2% and 685.3%, respectively, from the year-ago figures. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.

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The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 24.7%, respectively, from the year-ago reported figures. 

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The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.1% and 16.3%, respectively, from the year-ago figures.

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