The Kraft Heinz Company Q2 FY2025 earnings call

• Carlos reported Q2 results aligned with expectations, with improved year-over-year top line performance and investments starting to pay off, reiterating 2025 full year outlook. • Active on strategic transactions to unlock long-term shareholder value while maintaining financial discipline. • Recorded a $9.3 billion noncash impairment charge due to sustained stock price decline affecting intangible assets. • Invested in product superiority, manufacturing capabilities, pricing (about 100 bps year-over-year), marketing (aiming for 4.8% of net sales by end of 2025, up from previous levels), and expanded the Brand Growth System to more brands. • Product innovation hitting the market in areas like Mac & Cheese, Lunchables, Mayo, with expected market increases in the second half.

Emerging markets saw top line growth of around 8% through both price and volume, with emerging markets having the highest OI margin ever. In North America retail, when excluding cold cuts and bacon, the rest of the portfolio showed substantial improvement. Away From Home is expanding into footprint, distribution, and driving new innovation.

• Reiterated 2025 full year outlook as results came in line with expectations. • Confidence in continuing to invest in the business based on current strategy and strong balance sheet and cash flow.

• Risks and uncertainties related to forward-looking statements. • Sustained stock price decline triggering impairment of intangible assets. • Risks associated with strategic transactions, including potential higher costs and dis-synergies.

Q: Andrew Lazar asked about strategic transactions and investors' concern about them being financial engineering moves.

A: Carlos said the Board is evaluating strategic options to unlock long-term value with financial discipline.

Q: Peter Galbo asked about the $9.3 billion impairment.

A: Andre said it was due to sustained stock price decline reducing carrying value of intangible assets, not changing the view on the company's basic value.

Q: David Palmer asked about pricing, promotions, and strategic actions.

A: Carlos and Andre discussed pricing below inflation, investments in marketing, Brand Growth System in North America retail, and product innovation in various brands.

Q: Leah Jordan asked about emerging markets sales trends.

A: Carlos said emerging markets had 8% top line growth, driven by volume and price, with confidence in double-digit exit rate.

Q: Megan Clapp asked about North America retail sales trends.

A: Carlos discussed Brand Growth System impact, improvements in North America retail when excluding certain items, and continued investments.

Q: Max Gumport asked about reinvestment vs peers.

A: Andre said investments are disciplined, with testing before scaling, and they'll step up if results warrant.

Q: Alexia Howard asked about innovation pace.

A: Carlos talked about innovation progress, with innovation at 3% of sales by end of 2024 and plans to continue expanding Brand Growth System to more brands.