Summary details
Kraft Heinz said Wednesday it is pausing its planned breakup into two separate companies, a strategic shift that the company framed as a re-focus on profitable growth under its newly started CEO. CEO Steve Cahillane said he wants to ensure Kraft Heinz directs its resources toward growth rather than continuing with the split, and he described the company’s challenges as “fixable” and within its control.
The pause came as Kraft Heinz reported weaker results for the October-December period and reiterated broader pressure on performance that has built over several years. In morning trading, the company’s shares were flat after it reported lower quarterly and annual results, and analysts said investors were likely reacting to the company’s decision to hold off on a structure that would have put some of its brands on their own.
Cahillane, who took over as CEO on Jan. 1 after previously serving as chief executive of Kellogg Co., said in a statement that “the opportunity is larger than expected and that many of our challenges are fixable and within our control.” He said the company wants to focus on what it described as profitable growth, rather than proceeding on the timeline for a split the company announced in September.
Along with the change in plans, Kraft Heinz said it will invest $600 million in marketing, sales and product development. The company said Cahillane is “confident in the opportunity ahead” and that the investment “will accelerate our return to profitable growth,” signaling that management views product and commercial spending as the lever for near-term stabilization.
Kraft Heinz reported that net sales fell 3% to $6.35 billion in the October-December period, a figure below what analysts expected; analysts polled by FactSet had forecast $6.37 billion. The company said sales fell 5% in North America but rose internationally, and it reported that net income fell 69.5% to $651 million in the quarter.
When adjusted for one-time items, Kraft Heinz said it earned 67 cents per share, topping analysts’ forecast of 61 cents, according to the company’s reporting. Still, the overall profit and revenue decline underscored the pressure facing a packaged-food maker trying to navigate changing consumer habits, including weaker spending and preference shifts that have hurt demand for some processed products.
In an effort to provide context for the management shift, Kraft Heinz has described a long-running struggle to improve results and execute around the brands it owns. The company said the split it announced in September would have created one business centered on brands with stronger selling performance, including Heinz, Philadelphia cream cheese and Kraft Mac & Cheese, while a second company would have included brands described as slower-selling such as Maxwell House, Oscar Mayer, Kraft Singles and Lunchables.
Kraft Heinz said that, when it first announced the breakup in September, it expected to finalize it in the second half of this year and that it hired Cahillane—who had presided over a similar breakup at Kellogg in 2023—in December. The company’s decision on Wednesday effectively pauses that structural work and replaces it with additional spending focused on growth.
The company’s history traces back to the $23 billion merger of Kraft and Heinz that began in 2013, led by billionaire investor Warren Buffett teaming with Brazilian investment firm 3G Capital to buy H.J. Heinz Co. Over time, Buffett has said he had come to realize that Kraft Heinz’s competitive moat around its brands was not as strong as he expected, and Berkshire Hathaway has taken actions that have added to investor uncertainty, including a $3.76 billion write-down on its Kraft-Heinz investment.
The latest backdrop also includes Berkshire’s ownership position and possible future interest in reducing exposure. Kraft Heinz warned investors in a regulatory filing late last month that Berkshire Hathaway may be interested in selling its 325 million shares, with Berkshire’s CEO Greg Abel now leading the company after Buffett’s longtime oversight.