Packaged foods company Kraft Heinz (NASDAQ: KHC) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 1.9% year on year to $6.35 billion. Its non-GAAP profit of $0.69 per share was 8.4% above analysts’ consensus estimates.
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Kraft Heinz (KHC) Q2 CY2025 Highlights:
- Revenue: $6.35 billion vs analyst estimates of $6.27 billion (1.9% year-on-year decline, 1.2% beat)
- Adjusted EPS: $0.69 vs analyst estimates of $0.64 (8.4% beat)
- Adjusted EBITDA: -$7.76 billion vs analyst estimates of $1.47 billion (-122% margin, significant miss)
- Management reiterated its full-year Adjusted EPS guidance of $2.59 at the midpoint
- Operating Margin: -126%, down from 8.1% in the same quarter last year due to non-recurring $6.7 billion impairment charge
- Free Cash Flow Margin: 16.1%, up from 10.7% in the same quarter last year
- Organic Revenue fell 2% year on year, in line with the same quarter last year
- Sales Volumes fell 2.7% year on year, in line with the same quarter last year
- Market Capitalization: $33.8 billion
“We are proud to play a vital role in families’ lives, and our commitment to delivering superior, affordable, and accessible products is unwavering,” said Carlos Abrams-Rivera, CEO of Kraft Heinz.
Company Overview
The result of a 2015 mega-merger between Kraft and Heinz, Kraft Heinz (NASDAQ: KHC) is a packaged foods giant whose products span coffee to cheese to packaged meat.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.
With $25.31 billion in revenue over the past 12 months, Kraft Heinz is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have). However, its scale is a double-edged sword because there are only a finite number of major retail partners, placing a ceiling on its growth. To expand meaningfully, Kraft Heinz likely needs to tweak its prices, innovate with new products, or enter new markets.
As you can see below, Kraft Heinz struggled to increase demand as its $25.31 billion of sales for the trailing 12 months was close to its revenue three years ago. This is mainly because consumers bought less of its products - we’ll explore what this means in the "Volume Growth" section.
This quarter, Kraft Heinz’s revenue fell by 1.9% year on year to $6.35 billion but beat Wall Street’s estimates by 1.2%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and indicates its newer products will not accelerate its top-line performance yet.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Kraft Heinz generated its growth (or lack thereof) from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Kraft Heinz’s average quarterly volumes have shrunk by 4%. This isn’t ideal for a consumer staples company, where demand is typically stable. In the context of its 1.7% average organic sales declines, we can see that most of the company’s losses have come from fewer customers purchasing its products.
In Kraft Heinz’s Q2 2025, sales volumes dropped 2.7% year on year. This result represents a further deceleration from its historical levels, showing the business is struggling to move its products.
Key Takeaways from Kraft Heinz’s Q2 Results
It was encouraging to see Kraft Heinz beat analysts’ organic revenue growth, gross margin, and EPS expectations this quarter. That the company reiterated full-year EPS guidance shows that the business is cautiously on track. Overall, this was a solid quarter. The stock remained flat at $28.78 immediately following the results.
So do we think Kraft Heinz is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
