Executive Summary

Mixed Q4: Net sales fell 4.1% (organic -3.1%) on volume/mix declines across all segments, but profitability held with Adjusted EPS up 7.7% to $0.84 and Adjusted Operating Income down just 0.3% to $1.385B, aided by lower variable comp and procurement efficiencies .
Heavy non-GAAP noise: A $1.4B intangible impairment (largely Oscar Mayer) drove GAAP operating loss and GAAP EPS to $1.76 on the back of a $3.0B non-U.S. deferred tax asset recognition; Adjusted EPS better reflects core performance at $0.84 .
2025 guide implies a reset: Company initiated FY2025 guidance with organic sales flat to -2.5%, constant-currency Adjusted OI -1% to -4%, Adjusted EPS $2.63–$2.74 (higher effective tax rate ~26% and interest ~$900M headwinds), and FCF flat with ~95% conversion—prior 2025 guidance was not provided, so this is new and frames expectations lower than FY2024 Adjusted EPS of $3.06 .
Key narrative for 2025: Sequential top-line improvement driven by price investments in targeted U.S. brands (ACCELERATE platforms), Away From Home wins, and Emerging Markets distribution, while protecting margins via efficiencies; Lunchables headwinds expected to abate as supplier issue resolves by end of February and renovation/marketing rolls out .

What Went Well and What Went Wrong

What Went Well
- Adjusted profitability resilience: Adjusted EPS rose 7.7% YoY to $0.84; Adjusted OI nearly flat at $1.385B despite volume/mix pressure, reflecting efficiencies and lower variable comp .
- Margin discipline: Adjusted gross margin of 34.4% in Q4 (FY 34.7%) maintained industry-leading levels; management expects flat to slight expansion in 2025 despite reinvestment .
- Strategic growth pillars: Away From Home new wins locked (~75% of 2025 incremental growth) and Emerging Markets targeting +40k additional distribution points; 75% of 2025 innovation already locked, underpinning confidence in sequential top-line improvement (CEO) .
What Went Wrong
- Top-line softness: Q4 net sales -4.1% (organic -3.1%) as volume/mix declined 4.1 pp across all segments, reflecting consumer trade-down and U.S. Away From Home weakness .
- Brand-specific headwinds: Lunchables sales pressured by lingering negative publicity and a supplier ingredient shortfall (4 SKUs dragging sell-out >2x category), with recovery only from late Q1; Oscar Mayer impairment signaled brand pressure .
- Tax/estimates setup into 2025: Effective tax rate on Adjusted EPS guided to ~26% (approx. $0.23 Y/Y headwind) due to global minimum tax; CFO detailed a ~500 bps P&L rate increase despite cash tax benefits, muting FY25 EPS guide vs FY24 .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Net Sales ($B)	$6.860	$6.383	$6.576
Organic Net Sales YoY	—	-2.2%	-3.1%
Adjusted Gross Profit Margin	34.8%	34.3%	34.4%
Operating Income (Loss) ($B)	$1.300	$(0.101)	$(0.040)
Adjusted Operating Income ($B)	$1.389	$1.330	$1.385
Diluted EPS (GAAP)	$0.61	$(0.24)	$1.76
Adjusted EPS	$0.78	$0.75	$0.84

Segment net sales (Q4 2024 vs. Q4 2023)

Segment	Q4 2023 ($M)	Q4 2024 ($M)	YoY %	Organic YoY	Price	Volume/Mix
North America	5,167	4,968	-3.9%	-3.6%	+0.9 pp	-4.5 pp
International Developed	948	913	-3.6%	-4.0%	0.0 pp	-4.0 pp
Emerging Markets	745	695	-6.8%	+2.2%	+4.2 pp	-2.0 pp
Total	6,860	6,576	-4.1%	-3.1%	+1.0 pp	-4.1 pp

Additional context (Q4):

Gross profit $2.245B (down 3.1% YoY) .
Adjusted gross profit $2.262B; Adjusted gross margin 34.4% .
Adjusted EPS bridge: tax (+$0.04), share repurchases (+$0.02) supporting $0.84 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Net Sales (non-GAAP)	FY 2025	N/A (no prior FY25)	Flat to -2.5% vs PY	New
Constant-Currency Adjusted OI (non-GAAP)	FY 2025	N/A	-1% to -4% vs PY (includes ~210 bps headwind from lower 2024 variable comp)	New
Adjusted Gross Profit Margin (non-GAAP)	FY 2025	N/A	Flat to slight expansion vs PY	New
Adjusted EPS (non-GAAP)	FY 2025	N/A	$2.63–$2.74; ETR ~26%; interest exp. ~$900M; other (income) ~$(140)M	New
Free Cash Flow (non-GAAP)	FY 2025	N/A	Flat YoY; FCF conversion ~95%	New
Dividend	Next payable	N/A	Declared $0.40 per share for Mar 28, 2025	Regular dividend (no change indicated)

Note: FY2024 guidance was narrowed in Q3; FY2025 guidance was initiated with Q4 results .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024 / Q3 2024)	Current Period (Q4 2024)	Trend
Price/Trade & RGM	Selected trade up-weighting in 30–40% of U.S. portfolio to address branded price gaps; disciplined RGM vs 2019 promo levels	Invest in price, product, marketing; margin expansion 2025 “flat to +20 bps” while reinvesting (CEO/CFO)	Incrementally more targeted pricing support with guarded margin posture
Gross Margin & Efficiencies	Sustained productivity offsetting inflation; expectation for gradual, continued GM expansion LT	Efficiencies ahead of inflation; flat-to-slight GM expansion in 2025 despite higher tax and price investments	Stable-to-improving margin algorithm
U.S. Retail brand recovery	Mac & Cheese innovation/renovation to take time; Lunchables negative publicity; Q3 impairment tied to elongated recovery	Lunchables supplier issue resolved by Feb; renovation/marketing ramp; ACCELERATE brands prioritized; sequential topline improvement expected	Gradual improvement from Q2/Q3 lows
Away From Home	Q2 impact from plant downtime; ex-one-offs ~flat; pipeline of equipment (Heinz REMIX) and wins	75% of 2025 new AFH customer wins locked; building through year	Improving trajectory
Emerging Markets	Distribution gains; inventory destock in Brazil; China softness; share gains in modern trade	+40k incremental distribution points planned; exit FY25 double-digit EM growth targeted (CFO)	Re-acceleration
Marketing & Media	Stepping up working media, efficiency focus; innovation/renovation lead vs promos	$60–$80M more working media via nonworking cuts (>10% increase) at flat P&L %; focus on high-ROI placements	Higher working intensity
Tax/Global minimum tax	—	ETR up ~500 bps in P&L; ~$120M annual cash benefit for ~20 years from non-U.S. DTA; cash tax up 200–300 bps	Higher P&L tax drag vs improved cash tax profile
Technology/AI	Applying AI to optimize trade investments	Technology-led solutions cited to drive efficiencies and margins	Ongoing enablement
GLP-1	—	No meaningful impact; emphasizing protein and hydration options (Oscar Mayer, P3, beans)	Monitored; opportunity framing

Management Commentary

CEO on 2024 and capital return: “We remained disciplined in protecting profitability…generating strong cash flow, and returning $2.7 billion in capital to stockholders.” .
CEO on 2025 setup: “Momentum across product innovation, our Brand Growth System…Away From Home new client wins, and incremental distribution points across Emerging Markets…committed to…investments to drive top line improvement, while remaining disciplined.” .
CFO on tax: “Recorded a $2.4 billion P&L tax benefit…as a consequence, the [P&L] tax rate will have a 500 bps increase starting ’25…translates into approximately $120 million cash gains per year for the next 20 years.” .
CEO on reinvestment and margins: “We increased [gross] margin by 100 bps in 2024… 2025 somewhere between flat to 20 bps…investing in price, product and marketing…with technology-led solutions helping drive efficiencies.” .

Q&A Highlights

Is reinvestment sufficient to restore volume? Management argued 75% of 2025 innovation locked, targeted price support in U.S. ACCELERATE, and AFH/EM momentum enable sequential top-line improvement while margins remain flat to slightly higher .
Lunchables outlook: Supplier ingredient issue persists into Feb, then resolves; renovation, quality upgrades, and increased marketing expected to drive gradual recovery thereafter .
Effective tax rate step-up: P&L ETR rises to ~26% in 2025 due to global minimum tax; offset by ~$120M/yr cash tax benefit from recognized DTA, supporting ~95% FCF conversion guidance .
Marketing sufficiency: Working media up by $60–$80M (~>10%) through mix shift from nonworking at flat P&L percentage; focus on higher-return placements and brand roles (ACCELERATE/protect/balance) .
Organic sales cadence: Sequential improvement through 2025; Q2 aided by Easter shift and lapping plant downtime/Lunchables report, with sharper ACCELERATE improvement later in year (U.S.) .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024 (EPS and revenue) but could not due to a temporary data request limit; as such, consensus numbers are unavailable here and not shown. We recommend refreshing S&P Global consensus to benchmark the 2025 EPS guide ($2.63–$2.74) against current Street expectations once accessible .
FY2025 Adjusted EPS guidance ($2.63–$2.74) implies a YoY decline vs FY2024 Adjusted EPS of $3.06, primarily due to higher P&L tax rate and interest expense; this may prompt estimate recalibration without cutting reinvestment or margin ambitions .

Key Takeaways for Investors

Core earnings quality intact: Adjusted EPS growth (+7.7% YoY) and stable Adjusted OI in Q4 despite volume pressure underscore the durability of cost efficiencies and margin management .
2025 is a transition year: Guide embeds reinvestment and a higher ETR, lowering EPS vs 2024; sequential sales improvement depends on ACCELERATE U.S. brands, AFH wins, and EM distribution execution .
Brand repair plan is specific: Lunchables should improve post-Feb service fix with renovation and stronger marketing; Mac & Cheese and Capri Sun show green shoots from innovation and channel expansion .
Cash returns remain supported: Flat FCF with ~95% conversion and a regular $0.40 dividend declared; net leverage 2.9x gives flexibility alongside ~$900M interest expense headwind .
Watch the tax/cash dichotomy: P&L EPS pressured by ~500 bps ETR increase, but ~$120M/yr cash tax benefit for ~20 years supports FCF and reinvestment .
Trading lens: Near-term sentiment likely hinges on early 2025 sell-out inflection in U.S. ACCELERATE and visible AFH/EM contributions; any upside to price/mix or faster Lunchables recovery could be a catalyst .

Appendix: Additional Data Points

Q4 2024 all-company price +1.0 pp, volume/mix -4.1 pp; North America organic -3.6% (price +0.9 pp, volume/mix -4.5 pp) .
Major non-GAAP drivers of Q4 GAAP/Adjusted EPS divergence: impairments (+$0.90 adj.), discrete tax (-$1.86 adj.) per reconciliation .
FY2024 Adjusted EPS $3.06; Adjusted OI $5.36B; Adjusted gross margin 34.7% .

Sources: Q4 2024 8-K and press release (including reconciliations and guidance) ; Q4 2024 earnings call transcript –; Q3 2024 8-K – and transcript –; Q2 2024 8-K – and transcript –; Dividend press release .

Kraft Heinz Co (KHC)·Q4 2024 Earnings Summary