Kraft Heinz has put its idea to split in two on hold, with the US food-and-drinks group deciding instead to focus on getting the business growing again.
In September, the Heinz ketchup and Maxwell House coffee owner announced plans to create two separate businesses with “greater strategic and operational focus” to, the company said, “drive better performance”.
However, Steve Cahillane, Kraft Heinz’s recently installed CEO, said today (11 February) the company would “pause” the plans.
Cahillane, the former Kellanova CEO who took the helm at Kraft Heinz last month, said: “Since joining the company, I have seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control.
“My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan. As a result, we believe it is prudent to pause work related to the separation and we will no longer incur related dis-synergies this year.”
Cahillane’s comments came alongside the publication of Kraft Heinz’s annual financial results, which included lower sales, a decline in gross profits and a near $6bn net loss amid more than $6bn in goodwill impairment losses.
Fourth-quarter sales were also down, though the company booked an operating profit and a net profit, although the latter was down on the final three months of 2024.
Cahillane set out plans to invest $600m “across marketing, sales and R&D as well as product superiority and select pricing”.
He added: “Thanks to disciplined financial stewardship, our balance sheet is strong and our free cash flow capabilities, robust – positioning us well to fund these investments and execute on the plan, while still generating excess cash. We are confident in the opportunity ahead and believe this investment will accelerate our return to profitable growth.”
In the fourth quarter to 27 December, Kraft Heinz’s net sales fell 3.4% to $6.35bn, down 4.2% organically, amid a 4.7% drop in “volume/mix”.
The company booked a fourth-quarter operating income of $1.1bn versus an operating loss of $40m a year earlier, although it was lapping intangible asset impairment losses of $1.3bn. The group posted a quarterly net income of $651m compared to $2.13bn the year previous when it recorded a hefty tax benefit.
Full-year net sales declined 3.5% to $24.49bn. On an organic basis, they decreased 3.4% as volume/mix slid 4.1%.
The goodwill impairment losses meant Kraft Heinz posted an annual operating loss of $4.67bn, against a profit of $1.68bn in 2024. It booked a full-year net loss of $5.84bn versus a profit of $2.74bn the year previous.
Chair John Cahill added: “Kraft Heinz is already seeing the benefit of Steve’s deep industry experience and proven track record of building brands and leading large-scale transformations. From day one, he has brought a fresh, consumer-first perspective that we believe creates a clear glidepath back to profitable growth.
“We are confident that our decision to pause the work related to the separation and fully focusing our resources in service of growth is the right move at this time. We remain excited about the road ahead for Kraft Heinz.”
In pre-market trading at 12:48 ET, shares in the company were down more than 7%.
