Kraft Heinz (KHC, Financial) just wrapped up a rough 2024, with net sales slipping 3% to $25.8 billion and organic net sales down 2.1%—a clear sign that shifting consumer behavior and weaker volumes in key markets are taking a toll. Its share dropped over 3.4% as of 1.40pm today. Despite that, the company managed to push gross margins up 120 basis points to 34.7% and eked out a 1.2% gain in adjusted operating income, thanks to strategic pricing moves and cost-cutting efforts. The biggest blow came from a $3.7 billion non-cash impairment charge, which dragged operating income down 63.2%. On the bright side, Kraft Heinz generated $3.2 billion in free cash flow and returned $2.7 billion to shareholders, keeping investors somewhat reassured.

The fourth quarter wasn't much better. Net sales dropped 4.1%, and operating income sank into the red at -$40 million, largely due to a $1.4 billion hit to the Oscar Mayer brand. Higher labor and manufacturing costs didn't help either, though adjusted operating income dipped only 0.3% as the company leaned on pricing power. One bright spot? A major tax benefit sent diluted EPS skyrocketing 188.5% to $1.76. CEO Carlos Abrams-Rivera acknowledged the rough patch but doubled down on Kraft Heinz's game plan—betting on innovation, international growth, and margin discipline to drive a turnaround in 2025.

Looking ahead, Kraft Heinz is bracing for more challenges, projecting organic net sales to be flat or down as much as 2.5% in 2025. Adjusted EPS is expected to land between $2.63 and $2.74, as rising global tax rates and $900 million in interest expenses eat into profits. Free cash flow should hold steady, but the real test will be whether Kraft Heinz can reignite top-line growth. With inflation-weary consumers tightening their wallets, the company will need to execute flawlessly on brand reinvention and market expansion to regain momentum.