Kraft Heinz raises forecasts, but turnaround efforts struggle to excite investors

Cahillane has the right mindset, said a Kraft Heinz investor who asked not to be identified. "Building on growth is a good strategy," the person said. "We want more cash flow per share two to three years from now." Aug. 5 (Reuters) - Kraft Heinz raised its annual forecasts after beating quarterly sales estimates on Wednesday, but investor doubts about new CEO Steve Cahillane's turnaround efforts sent shares down about 4% in morning trade. Since taking the helm in January, Cahillane has postponed a planned split of the business and ramped up spending on marketing and innovation as the company leans aggressively into protein-heavy foods and electrolyte-infused drinks to attract health-conscious consumers. Cahillane has overseen market-share improvements across the board, but with sales still down, volume growth remaining elusive and inflationary headwinds set to last well into 2027, plenty of challenges remain. "The momentum is growing. Nobody's doing a victory lap that we're declining less than we anticipated. But it is moving in the right direction," Cahillane said on a post-earnings call on Wednesday, adding that this was giving the company confidence to invest further to boost consumption and market share. Kraft Heinz said it would increase its incremental investments — most of which are for marketing — by $100 million to about $700 million in 2026, a cash injection Cahillane had hinted at during an interview with Reuters in June. The company now expects annual organic sales to fall between 0.5% and 2.0%, compared with its prior forecast for a 1.5% to 3.5% decline. It also narrowed its guidance for annual adjusted earnings per share to between $2.03 and $2.09, compared with $1.98 and $2.10 previously. Barclays analysts said the results were encouraging, particularly since the company was "increasing its planned investment spend based on early returns, rather than the current investment levels not yielding the desired results." But those investments have contributed to Kraft Heinz lowering its outlook for constant-currency adjusting operating profit to a decline of 18% to 16% in 2026, compared with 18% to 14% previously, BNP Paribas Equity Research senior analyst Max Gumport said in a note. With the company expecting 2027 inflation of 4% to 5%, Gumport said skepticism about the next year would remain. While Kraft Heinz benefited from price-led growth during the quarter, its volumes remained under pressure in key markets including North America. Market share in North America declined across both meats and meals, CFO Andre Maciel said in prepared remarks. Meanwhile, the company is making product and packaging investments across its Oscar Mayer brand and stepping up innovation for Kraft Mac & Cheese, to which it added the protein-heavy PowerMac line earlier this year for consumers looking to maintain muscle mass as they lose weight. Kraft Heinz has been navigating a challenging environment as energy and raw material costs surge amid ongoing geopolitical conflicts. Maciel said the company was well hedged on energy and edible oils for most of 2026, but was hedged on certain resins and metals only through the middle of the third quarter. "As those roll off, we expect greater exposure to spot prices in the fourth quarter," he said. A non-cash $7.4 billion impairment charge contributed to an operating loss during the second quarter, though one smaller than the company reported a year earlier. Quarterly sales fell 1.4% to $6.26 billion from a year earlier.

Kraft Heinz raises forecasts, but turnaround efforts struggle to excite investors

Investor reaction remains measured

Kraft Heinz raises forecasts after quarterly sales beat

CEO says momentum is improving, but investors remain cautious

Volumes remain under pressure as the company leans on product investments

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