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 and six months ended June 27, 2026 compared to the three and six months ended June 28, 2025 were:

Adjusted Operating Income:

North America:

Net sales decreased 2.7% to $4.6 billion for the three months ended June 27, 2026 compared to $4.8 billion for the three months ended June 28, 2025. Organic Net Sales decreased 2.7% to $4.6 billion for the three months ended June 27, 2026 compared to $4.8 billion for the three months ended June 28, 2025, primarily due to unfavorable volume/mix (3.8 pp), which more than offset higher pricing (1.1 pp). Unfavorable volume/mix was primarily due to declines in meats, spreads, and cheese.

Unfavorable volume/mix for meats and spreads were partially driven by the shift in Easter timing. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in refreshment beverages and coffee.

Segment Adjusted Operating Income decreased 15.8% to $1.0 billion for the three months ended June 27, 2026 compared to $1.2 billion for the three months ended June 28, 2025, primarily due to unfavorable volume/mix, increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and higher variable compensation and related tax expenses. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

Net sales decreased 1.7% to $9.1 billion for the six months ended June 27, 2026 compared to $9.2 billion for the six months ended June 28, 2025, including the favorable impacts of foreign currency (0.3 pp). Organic Net Sales decreased 2.0% to $9.1 billion for the six months ended June 27, 2026 compared to $9.2 billion for the six months ended June 28, 2025, primarily due to unfavorable volume/mix (2.7 pp), which more than offset higher pricing (0.7 pp). Unfavorable volume/mix was primarily driven by declines in meats, coffee, and spreads. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee and refreshment beverages.

Segment Adjusted Operating Income decreased 13.7% to $2.0 billion for the six months ended June 27, 2026 compared to $2.3 billion for the six months ended June 28, 2025, primarily due to increased advertising expenses, unfavorable volume/mix, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, higher variable compensation and related tax expenses, and increased research and development expenditures. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

International Developed Markets:

Net sales decreased 3.5% to $865 million for the three months ended June 27, 2026 compared to $897 million for the three months ended June 28, 2025, including the favorable impacts of foreign currency (2.1 pp) and unfavorable impact of acquisitions and divestitures (4.9 pp). Organic Net Sales decreased 0.7% to $846 million for the three months ended June 27, 2026 compared to $852 million for the three months ended June 28, 2025, primarily due to unfavorable volume/mix (1.4 pp), which more than offset higher pricing (0.7 pp). Unfavorable volume/mix was primarily driven by Australia and Western Europe regions, due in part to negotiations with certain customers, which more than offset favorable volume/mix in France, Benelux and the United Kingdom.

Segment Adjusted Operating Income decreased 9.1% to $124 million for the three months ended June 27, 2026 compared to $136 million for the three months ended June 28, 2025, primarily driven by increased SG&A, including advertising expenses and variable compensation and related tax expenses, and inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives. These unfavorable impacts to Segment Adjusted Operating Income more than offset efficiency initiatives in procurement that outpaced inflationary pressures.

Net sales decreased 0.3% to $1.7 billion for the six months ended June 27, 2026 compared to $1.7 billion for the six months ended June 28, 2025, including the favorable impacts of foreign currency (4.9 pp) and unfavorable impact of acquisitions and divestitures (4.8 pp). Organic Net Sales decreased 0.4% to $1.6 billion for the six months ended June 27, 2026 compared to $1.6 billion for the six months ended June 28, 2025, primarily due to unfavorable volume/mix (0.8 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to Australia and Western Europe regions negotiations with certain customers, which more than offset favorable volume/mix in the United Kingdom, Benelux, and France.

Segment Adjusted Operating Income decreased 2.4% to $257 million for the six months ended June 27, 2026 compared to $263 million for the six months ended June 28, 2025, primarily driven by increased advertising expenses, the Italy Infant

Transaction, variable compensation and related tax expenses, and inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives. These unfavorable impacts to Segment Adjusted Operating Income more than offset efficiency initiatives in procurement that outpaced inflationary pressures and the favorable impact of foreign currency (3.9 pp).

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 10.4% to $771 million for the three months ended June 27, 2026 compared to $698 million for the three months ended June 28, 2025, including the favorable impacts of foreign currency (1.9 pp). Organic Net Sales increased 8.5% to $735 million for the three months ended June 27, 2026 compared to $678 million for the three months ended June 28, 2025, primarily driven by higher pricing (4.5 pp), and favorable volume/mix (4.0 pp). Pricing was higher in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Brazil, Venezuela, and China, which more than offset unfavorable volume/mix in Indonesia.

Segment Adjusted Operating Income increased 6.7% to $107 million for the three months ended June 27, 2026 compared to $100 million for the three months ended June 28, 2025, primarily due to higher pricing, indirect tax recoveries within Brazil, and favorable volume/mix. These favorable impacts to Segment Adjusted Operating Income more than offset increased inflationary pressures in procurement, manufacturing, and logistics costs that outpaced our efficiency initiatives, advertising expenses, and higher variable compensation and related tax expenses.

Six Months Ended June 27, 2026 Compared to the Six Months Ended June 28, 2025

Net sales increased 9.0% to $1.5 billion for the six months ended June 27, 2026 compared to $1.4 billion for the six months ended June 28, 2025, including the favorable impacts of foreign currency (2.9 pp). Organic Net Sales increased 6.1% to $1.4 billion for the six months ended June 27, 2026 compared to $1.4 billion for the six months ended June 28, 2025, primarily due to higher pricing (4.4 pp), and favorable volume/mix (1.7 pp). Pricing was higher in certain countries within WEEM to address inflationary pressures. Favorable volume/mix was primarily driven by Brazil, Venezuela, and China, which more than offset unfavorable volume/mix in Indonesia.

Segment Adjusted Operating Income increased 1.4% to $202 million for the six months ended June 27, 2026 compared to $199 million for the six months ended June 28, 2025, primarily due to higher pricing, favorable volume/mix, and indirect tax recoveries within Brazil. These favorable impacts to Segment Adjusted Operating Income more than offset inflationary pressures in procurement, manufacturing, and logistics costs that outpaced our efficiency initiatives, increased advertising expenses, and higher variable compensation and related tax expenses.