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- **Modest Recovery Despite Challenges**: Q3 revenue growth reflects progress in North America, but consumer sentiment and inflation remain headwinds.
- **Profit Revision Drivers**: Lower U.S. consumption, slower Taste Elevation recovery, and inflation in Meat/Coffee drove profit adjustments.
- **Emerging Markets Mixed**: Indonesia struggles with $300M sales impact, while Brazil, Mexico show 9.2% growth.
- **Spin-Off On Track**: No pivot in separation plan; both companies target investment-grade status with stable cash flow.
- **Q4 Challenges**: Inventory headwinds (~100-120bps) and soft demand expected to weigh on results.
- **Promotional Strategy**: Testing higher-frequency, lower-discount tactics; Q3 promotions focused on holiday season and new product trials.

**【CEO Opening Remarks】**
- Q3 revenue showed modest year-over-year recovery, driven by progress in North America despite challenging consumer sentiment and inflation.
- Updated 2025 outlook reflects slower-than-expected recovery in Taste Elevation and incremental inflation impacts.
- On track for separation into two independent companies by mid-2026, with focus on building long-term brand strength.

**【CFO Financial Commentary】**
- Profit revision due to lower U.S. consumption expectations, slower Taste Elevation recovery (70% of revenue gaining market share), and incremental inflation in Meat and Coffee.
- Increased promotional spending by $300M and media investment by $80M in 2025, with Q3 results impacted by one-time supply chain issues.
- Maintaining cash flow discipline, with year-over-year cash flow growth despite EBITDA decline.

**【Q&A Highlights】**
- **Consumer Sentiment & Spending**: CEO emphasizes long-term brand building over short-term marketing blitzes; Q3 back-to-school campaign drove success for Capri Sun, Lunchables, and Jell-O.
- **Emerging Markets**: Indonesia ($300M revenue) faces inventory and distribution challenges, but 9.2% growth in other Emerging Markets (e.g., Brazil, Mexico) offsets weakness.
- **Spin-Off Execution**: No pivot in separation plan; both companies expected to be investment-grade with net debt <4x. Global Taste Elevation Co. targets 2026 growth, North American Grocery Co. focuses on stable cash flow.
- **Q4 Guidance**: Inventory headwinds (~100-120bps) and soft consumer demand expected to weigh on results, with limited share gains offsetting industry decline.
- **Promotional Effectiveness**: Higher-frequency, lower-discount strategies being tested; Q3 promotions focused on holiday season and new product trials, with mixed ROI.
- **Commoditized Categories**: Brand Growth System being applied to Coffee, Meats, and Cheese, despite lower consumer engagement. Sliced Meats and Coffee face headwinds, but long-term focus on renovation and distribution improvements.

The Kraft Heinz Company (KHC) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KHC

KHC fundamentals

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