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, separation costs, 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 3, 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 and nine months ended September 27, 2025 compared to the three and nine months ended September 28, 2024 were:

Adjusted Operating Income:

North America:

Net sales decreased 3.8% to $4.6 billion for the three months ended September 27, 2025 compared to $4.8 billion for the three months ended September 28, 2024. Organic Net Sales decreased 3.8% to $4.6 billion for the three months ended September 27, 2025 compared to $4.8 billion for the three months ended September 28, 2024, primarily due to unfavorable volume/mix (4.2 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to declines in coffee, cold cuts, frozen snacks, and certain condiments. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.

Segment Adjusted Operating Income decreased 17.8% to $1.0 billion for the three months ended September 27, 2025 compared to $1.2 billion for the three months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, increased SG&A, primarily due to increased advertising expenses, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.

Net sales decreased 4.7% to $13.9 billion for the nine months ended September 27, 2025 compared to $14.6 billion for the nine months ended September 28, 2024, including the unfavorable impacts of foreign currency (0.2 pp). Organic Net Sales decreased 4.5% to $13.9 billion for the nine months ended September 27, 2025 compared to $14.6 billion for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix (4.9 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily driven by declines in cold cuts, coffee, frozen snacks, desserts, and certain condiments. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.

Segment Adjusted Operating Income decreased 13.2% to $3.3 billion for the nine months ended September 27, 2025 compared to $3.8 billion for the nine months ended September 28, 2024, primarily due to inflationary pressures in commodity and manufacturing costs that outpaced our efficiency initiatives, unfavorable volume/mix, higher depreciation expense, and the unfavorable impact of foreign currency (0.1 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and decreased SG&A, primarily due to decreased advertising expenses, and lower variable compensation expense.

International Developed Markets:

Net sales increased 1.6% to $895 million for the three months ended September 27, 2025 compared to $882 million for the three months ended September 28, 2024, including the favorable impacts of foreign currency (3.0 pp). Organic Net Sales decreased 1.4% to $869 million for the three months ended September 27, 2025 compared to $882 million for the three months ended September 28, 2024, primarily due to unfavorable volume/mix (2.4 pp), which more than offset higher pricing (1.0 pp). Unfavorable volume/mix was primarily due to continued industry slowdowns in meals in the United Kingdom and pricing elasticity in New Zealand.

Segment Adjusted Operating Income decreased 3.5% to $130 million for the three months ended September 27, 2025 compared to $135 million for the three months ended September 28, 2024, primarily due to unfavorable volume/mix and increased SG&A, primarily due to increased variable compensation expense and research and development costs. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and the favorable impact of foreign currency (4.1 pp).

Net sales decreased 0.5% to $2.6 billion for the nine months ended September 27, 2025 compared to $2.6 billion for the nine months ended September 28, 2024, including the favorable impacts of foreign currency (1.3 pp). Organic Net Sales decreased 1.8% to $2.6 billion for the nine months ended September 27, 2025 compared to $2.6 billion for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix (2.3 pp), which more than offset higher pricing (0.5 pp). Unfavorable volume/mix was primarily due to continued industry slowdowns of meals in the United Kingdom and pricing elasticity in New Zealand.

Segment Adjusted Operating Income decreased 1.0% to $393 million for the nine months ended September 27, 2025 compared to $397 million for the nine months ended September 28, 2024, primarily due to unfavorable volume/mix and inflationary pressures in manufacturing and procurement costs that outpaced our efficiency initiatives. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing, the favorable impact of foreign currency (2.8 pp), lower amortization expense, and decreased SG&A, primarily due to decreased advertising expenses.

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 3.8% to $701 million for the three months ended September 27, 2025 compared to $675 million for the three months ended September 28, 2024, including the unfavorable impacts of foreign currency (0.9 pp). Organic Net Sales increased 4.7% to $687 million for the three months ended September 27, 2025 compared to $655 million for the three months ended September 28, 2024, primarily driven by higher pricing (4.0 pp) and favorable volume/mix (0.7 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 region, which more than offset unfavorable volume/mix in Indonesia.

Segment Adjusted Operating Income decreased 6.5% to $79 million for the three months ended September 27, 2025 compared to $84 million for the three months ended September 28, 2024, primarily due to increased advertising expenses, higher procurement and logistics costs reflecting inflationary pressure in WEEM, unfavorable changes in allowances for trade receivables in Indonesia, higher depreciation expense, and the unfavorable impact of foreign currency (1.8 pp). These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing, reduced manufacturing costs primarily as a result of our efficiency initiatives, and favorable volume/mix.

Net sales increased 0.9% to $2.1 billion for the nine months ended September 27, 2025 compared to $2.1 billion for the nine months ended September 28, 2024, including the unfavorable impacts of foreign currency (4.0 pp) and divestitures (0.5 pp). Organic Net Sales increased 5.4% to $2.1 billion for the nine months ended September 27, 2025 compared to $2.0 billion for the nine months ended September 28, 2024, primarily driven by higher pricing (4.5 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 19.6% to $278 million for the nine months ended September 27, 2025 compared to $232 million for the nine months ended September 28, 2024, primarily due to higher pricing, reduced manufacturing costs, primarily as a result of our efficiency initiatives, and favorable volume/mix. These favorable impacts to Segment Adjusted Operating Income more than offset increased SG&A, primarily due to increased advertising expenses, higher procurement and logistics costs reflecting inflationary pressure in WEEM, higher depreciation expense, and the unfavorable impact of foreign currency (4.9 pp).