CEO Steve Cahillane says investments in brand-building are gaining traction, but the company kept its cautious full-year outlook
Scott Olson / Getty Images
Kraft Heinz $KHC reported first-quarter net sales of $6.05 billion, topping Wall Street expectations, as CEO Steve Cahillane's push to revive the packaged-food company's brands showed early momentum. Kraft Heinz stock rose about 3% in premarket trading.
Analysts had expected quarterly sales of $5.89 billion, according to Reuters, citing data compiled by LSEG. Diluted earnings per share came in at $0.67, up 13.6% from a year earlier. On an adjusted basis, EPS was $0.58, down 6.5% from the prior-year period, the company said.
Brand investments made in 2025 are starting to pay off, according to Cahillane, who took the helm at Kraft Heinz in January. "The investments we made in 2025 are now driving early traction, with improving market share trends, particularly within must-win parts of our portfolio like Taste Elevation," he said in a statement. He added that 35% of the company's business was gaining or holding market share in the quarter, up from 21% a year earlier, according to Bloomberg.
Compared with a year earlier, prices across the quarter increased 0.8 percentage points and volumes declined 1.2 percentage points. Price increases in select categories were implemented to absorb rising input costs, with coffee and cold cuts weighing on volume. Organic net sales — which strip out the effects of currency, acquisitions, and divestitures — fell 0.4% from the prior-year period.
Gross profit margin expanded 230 basis points to 36.7%, though adjusted gross profit margin narrowed 30 basis points to 34.1%. Free cash flow reached $0.8 billion, up 58.9% from a year earlier, the company said.
Kraft Heinz kept its full-year 2026 outlook unchanged. The company expects organic net sales to fall by 1.5% to 3.5% and adjusted EPS to be between $1.98 and $2.10. Cahillane said the cautious forecast is due to rising inflation and weak consumer sentiment, calling it a volatile environment.
A previously announced separation into two publicly traded entities was shelved earlier this year, a decision Reuters says is on track to spare the company $300 million in costs this year. In place of the split, roughly $600 million has been committed to marketing, sales, and research and development with the goal of revitalizing the U.S. business. The company's 2026 outlook includes the impact of those incremental investments as well as an approximately 100 basis point headwind from reduced SNAP program benefits.
Emerging Markets was the fastest-growing segment, with net sales rising 7.6% to $746 million. North America net sales edged down 0.7% to $4.46 billion. The company paid $474 million in dividends during the quarter and did not repurchase any stock under its buyback program.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
