Home / Business and Economy / Kraft Heinz Splits: Can Two Be Better Than One?
Kraft Heinz Splits: Can Two Be Better Than One?
6 Dec
Summary
- Kraft Heinz plans to split into two independent companies.
- The company faces challenges with mature, less-favored brands.
- A high-yield dividend of 6.3% is supported by strong free cash flow.
Kraft Heinz is set to split into two distinct companies, an ambitious move to address its long-standing underperformance. The conglomerate, known for household names like Kraft, Heinz, and Oscar Mayer, has struggled to achieve top-line growth due to a portfolio dominated by mature brands that have fallen out of favor with evolving consumer tastes.
Since 2020, Kraft Heinz has reported minimal revenue increases, with its 2024 revenue of $25.8 billion representing a 3% decrease from the prior year. The proposed split will create two businesses: one centered around Heinz, Kraft Macaroni and Cheese, and Philadelphia Cream Cheese, and the other led by Oscar Meyer, Lunchables, and Kraft Singles.
Management asserts this separation will allow each new entity to focus resources more effectively. However, challenges persist as many of these products are considered steady, unexciting staples in a market favoring healthier and more diverse options. Despite these headwinds, Kraft Heinz continues to offer a compelling 6.3% dividend yield, underpinned by nearly $3.2 billion in free cash flow generated in 2024.
