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 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025, 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 March 28, 2026 compared to the three months ended March 29, 2025 were:

Adjusted Operating Income:

North America:

Net sales decreased 0.7% to $4.5 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025. Organic Net Sales decreased 1.1% to $4.4 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (1.5 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to declines in coffee, cold cuts, powdered beverages, and frozen snacks, which more than offset the favorable impact to certain categories as a result of the shift in Easter timing. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.

Segment Adjusted Operating Income decreased 11.6% to $1.0 billion for the three months ended March 28, 2026 compared to $1.1 billion for the three months ended March 29, 2025, primarily due to inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, increased advertising expenses, and unfavorable volume/mix. These unfavorable impacts to Segment Adjusted Operating Income more than offset certain nonrecurring procurement cost recoveries, higher pricing, and the favorable impact of foreign currency (0.3 pp).

International Developed Markets:

Net sales increased 3.2% to $843 million for the three months ended March 28, 2026 compared to $817 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (7.9 pp) and unfavorable impact of acquisitions and divestitures (4.6 pp). Organic Net Sales decreased 0.1% to $779 million for the three months ended March 28, 2026 compared to $780 million for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (0.3 pp), which more than offset higher pricing (0.2 pp). Unfavorable volume/mix was primarily due to a temporary pause in shipments due to negotiations with certain customers within our Western Europe and Australia regions, which more than offset favorable volume/mix in the United Kingdom.

Segment Adjusted Operating Income increased 4.9% to $133 million for the three months ended March 28, 2026 compared to $127 million for the three months ended March 29, 2025, primarily driven by the favorable impact of foreign currency (7.0 pp) and decreased procurement costs, which more than offset the decrease in Segment Adjusted Operating Income resulting from the Italy Infant Transaction and increased 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 7.6% to $746 million for the three months ended March 28, 2026 compared to $694 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (3.8 pp). Organic Net Sales increased 3.8% to $702 million for the three months ended March 28, 2026 compared to $676 million for the three months ended March 29, 2025, primarily driven by higher pricing (4.4 pp), which more than offset unfavorable volume/mix (0.6 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Unfavorable volume/mix was primarily driven by Indonesia.

Segment Adjusted Operating Income decreased 4.0% to $95 million for the three months ended March 28, 2026 compared to $99 million for the three months ended March 29, 2025, primarily due to inflationary pressures in procurement and manufacturing costs that outpaced our efficiency initiatives, increased SG&A due, in part, to increased headcount in our sales and marketing teams, and increased advertising expenses. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.