Kraft Heinz Q2 2025: A $9.3B Writedown Leads to a $7.8B Loss

When a food and beverage titan like Kraft Heinz (NASDAQ: KHC) releases its quarterly earnings, we get a chance to peek inside the kitchen and see what's cooking. Their latest 10-Q filing for the second quarter of 2025 offers a complex recipe of operational struggles and significant accounting adjustments. Let's slice into the numbers to see what they reveal.

On the surface, Kraft Heinz's sales held relatively steady, with a minor dip. Net sales for the quarter came in at $6.35 billion, a 1.9% decrease from the same period last year. For the first six months of 2025, sales were down 4.2% to $12.35 billion. However, the headline story isn't about sales; it's the staggering $7.8 billion net loss for the quarter.

The Multi-Billion Dollar Writedown

This dramatic loss wasn't caused by a collapse in day-to-day operations. Instead, it was driven by massive non-cash impairment charges totaling $9.3 billion. This included:

• $6.7 billion in Goodwill impairment
• $2.6 billion in Intangible Asset impairment

So, what is an impairment? It's an accounting adjustment a company makes when it determines an asset—like the brand value of Oscar Mayer or the goodwill from a past acquisition—is no longer worth the value carried on its books. While it doesn't impact cash flow directly, it reflects a significant downward revision of the asset's future earnings potential.

To better understand how revenue flows through the company's costs to reach the final profit or loss, here's a visual breakdown of the income statement for the last six months.

A Tale of Three Markets

Looking past the impairment noise, the company's performance varied significantly across its global segments. We can get a clearer picture using Organic Net Sales, which strips out the effects of currency fluctuations and acquisitions.

• North America: The company's largest market, saw organic sales fall by 3.2%. This was almost entirely due to a 3.4% decline in volume and product mix, suggesting consumers are buying less of their products, even as prices remained mostly flat.
• International Developed Markets: Organic sales here also declined by 2.2%, driven by a 2.9% drop in volume/mix.
• Emerging Markets: This was the clear bright spot. Organic sales grew by a robust 7.6%, powered by a healthy combination of price increases (5.2%) and volume growth (2.4%). This signals strong demand and brand power in these developing regions.

An Adjusted View

To gauge underlying profitability, analysts often turn to Adjusted EPS (Earnings Per Share), which excludes one-off items like the impairment charges. For the second quarter, Kraft Heinz reported Adjusted EPS of $0.69, down 11.5% from $0.78 a year ago. This decline was primarily driven by weaker operational results and a higher effective tax rate.

Kraft Heinz is navigating a challenging environment, especially in its core North American market where volume is under pressure. The substantial impairment charges, while an accounting measure, signal a fundamental reassessment of the long-term value of some of its iconic brands. While growth in emerging markets provides a silver lining, the company's success will depend on its ability to reinvigorate demand and compete effectively in the grocery aisles of its largest, most established markets.