Kraft Heinz Co

We manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.

Management evaluates segment performance based on several factors, including net sales, Organic Net Sales, and Segment Adjusted Operating Income. Segment Adjusted Operating Income is defined as operating income/(loss) excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, and certain non-ordinary course legal and regulatory matters. Segment Adjusted Operating Income for Emerging Markets, which represents the aggregation of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments — North America and International Developed Markets. Segment Adjusted Operating Income is a financial measure that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management also uses Segment Adjusted Operating Income to allocate resources.

Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally available exchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in other expense/(income) on our condensed consolidated statements of income, as nonmonetary currency devaluation, rather than accumulated other comprehensive income/(losses) on our condensed consolidated balance sheets, until such time as the economy is no longer considered highly inflationary. See Note 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 28, 2024, for additional information. We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Turkey, and Egypt, which are all in Emerging Markets.

Net Sales:

Organic Net Sales:

Drivers of the changes in net sales and Organic Net Sales for the three months ended June 28, 2025 compared to the three months ended June 29, 2024 were:

Adjusted Operating Income:

North America:

Net sales decreased 3.3% to $4.8 billion for the three months ended June 28, 2025 compared to $4.9 billion for the three months ended June 29, 2024, including the unfavorable impacts of foreign currency (0.1 pp). Organic Net Sales decreased 3.2% to $4.8 billion for the three months ended June 28, 2025 compared to $4.9 billion for the three months ended June 29, 2024, primarily due to unfavorable volume/mix (3.4 pp), which more than offset higher pricing (0.2 pp). Unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, Lunchables, frozen snacks, and powdered beverages. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.

Segment Adjusted Operating Income decreased 12.5% to $1.2 billion for the three months ended June 28, 2025 compared to $1.3 billion for the three months ended June 29, 2024, primarily due to increased commodity cost inflation, which more than offset our efficiency initiatives, unfavorable volume/mix, higher research and development costs, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset decreased advertising expenses, and higher pricing.

Net sales decreased 5.2% to $9.2 billion for the six months ended June 28, 2025 compared to $9.7 billion for the six months ended June 29, 2024, including the unfavorable impacts of foreign currency (0.4 pp). Organic Net Sales decreased 4.8% to $9.3 billion for the six months ended June 28, 2025 compared to $9.7 billion for the six months ended June 29, 2024, primarily due to unfavorable volume/mix (5.2 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, Lunchables, and desserts. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.

Segment Adjusted Operating Income decreased 11.0% to $2.3 billion for the six months ended June 28, 2025 compared to $2.6 billion for the six months ended June 29, 2024, primarily due to unfavorable volume/mix, increased commodity cost inflation, which more than offset our efficiency initiatives, higher depreciation expense, higher research and development costs, and the unfavorable impact of foreign currency (0.2 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset decreased SG&A, primarily due to decreased advertising expenses, lower variable compensation expense, and higher pricing.

International Developed Markets:

Net sales increased 1.3% to $897 million for the three months ended June 28, 2025 compared to $885 million for the three months ended June 29, 2024, including the favorable impacts of foreign currency (3.5 pp). Organic Net Sales decreased 2.2% to $866 million for the three months ended June 28, 2025 compared to $885 million for the three months ended June 29, 2024, primarily due to unfavorable volume/mix (2.9 pp), which more than offset higher pricing (0.7 pp). Unfavorable volume/mix was primarily due to pricing elasticity in New Zealand and industry slowdowns in meals in the United Kingdom.

Segment Adjusted Operating Income increased 8.2% to $136 million for the three months ended June 28, 2025 compared to $126 million for the three months ended June 29, 2024, primarily driven by decreased SG&A, the favorable impact of foreign currency (5.7 pp), and higher pricing, which more than offset unfavorable volume/mix.

Net sales decreased 1.5% to $1.7 billion for the six months ended June 28, 2025 compared to $1.7 billion for the six months ended June 29, 2024, including the favorable impacts of foreign currency (0.5 pp). Organic Net Sales decreased 2.0% to $1.7 billion for the six months ended June 28, 2025 compared to $1.7 billion for the six months ended June 29, 2024, primarily due to unfavorable volume/mix (2.2 pp), which more than offset higher pricing (0.2 pp). Unfavorable volume/mix was primarily due to industry slowdowns of meals in the United Kingdom.

Segment Adjusted Operating Income increased 0.3% to $263 million for the six months ended June 28, 2025 compared to $262 million for the six months ended June 29, 2024, primarily driven by decreased SG&A, primarily for advertising expenses, the favorable impact of foreign currency (2.1 pp), and higher pricing, partially offset by unfavorable volume/mix and inflationary pressures in manufacturing and procurement, which more than offset our efficiency initiatives.

Emerging Markets:

(b) Segment Adjusted Operating Income for Emerging Markets, which represents the combination of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments - North America and International Developed Markets.

Net sales increased 4.2% to $698 million for the three months ended June 28, 2025 compared to $670 million for the three months ended June 29, 2024, including the unfavorable impacts of foreign currency (3.1 pp) and divestitures (0.3 pp). Organic Net Sales increased 7.6% to $701 million for the three months ended June 28, 2025 compared to $652 million for the three months ended June 29, 2024, primarily driven by higher pricing (5.2 pp) and favorable volume/mix (2.4 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Taste Elevation within our LATAM and Middle East and Africa (“MEA”) regions, which more than offset unfavorable volume/mix in certain countries within our Eastern Europe region.

Segment Adjusted Operating Income increased 52.3% to $100 million for the three months ended June 28, 2025 compared to $66 million for the three months ended June 29, 2024, primarily due to higher pricing, favorable volume/mix and manufacturing efficiency gains, which more than offset manufacturing inflation. These favorable impacts to Segment Adjusted Operating Income more than offset higher procurement and logistics costs reflecting inflationary pressure in WEEM, increased SG&A, higher depreciation expense, and the unfavorable impact of foreign currency (4.0 pp).

Net sales decreased 0.4% to $1.4 billion for the six months ended June 28, 2025 compared to $1.4 billion for the six months ended June 29, 2024, including the unfavorable impacts of foreign currency (5.3 pp) and divestitures (0.8 pp). Organic Net Sales increased 5.7% to $1.4 billion for the six months ended June 28, 2025 compared to $1.4 billion for the six months ended June 29, 2024, primarily driven by higher pricing (4.8 pp) and favorable volume/mix (0.9 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Taste Elevation within LATAM, particularly in Brazil, which more than offset unfavorable volume/mix in Indonesia.

Segment Adjusted Operating Income increased 34.5% to $199 million for the six months ended June 28, 2025 compared to $148 million for the six months ended June 29, 2024, primarily due to higher pricing, favorable volume/mix and reduced manufacturing costs, primarily as a result of our efficiency initiatives. These favorable impacts to Segment Adjusted Operating Income more than offset higher procurement and logistics costs reflecting inflationary pressure in WEEM, the unfavorable impact of foreign currency (6.5 pp), and higher depreciation expense.