By Juveria Tabassum
Feb 11 (Reuters) – Kraft Heinz has halted efforts to split the company, with new CEO Steve Cahillane saying that most challenges are “fixable and within our control”, a surprise move that sent its shares down 5% before the bell.
The packaged foods maker announced plans to split into two – one focused on groceries and the other on sauces and spreads – in September, after failing to achieve the kind of growth expected when the Kraft and Heinz businesses merged a decade ago.
The decision to split followed years of cost-cutting and underinvestment for the company. Kraft Heinz has lagged its peers in the U.S. food sector, where sales have slowed as consumers pull back on spending following years of price hikes.
“My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan,” Cahillane, who took charge in January, said.
“As a result, we believe it is prudent to pause work related to the separation and we will no longer incur related dissynergies this year.”
The company said it would not incur $300 million in dis-synergies or meaningful additional one-time costs in 2026.
RARE REVERSAL FOR CORPORATE SPLITS
Kraft Heinz is among the few companies to reverse a major breakup, as only about one in 10 corporate spinoffs are canceled on average, according to a 2022 report by KPMG.
Kraft Heinz had expected to close the spinoff at the end of 2026, and brought on industry veteran and former Kellogg boss Cahillane to guide it through the split.
Cahillane, who had previously guided Kellogg through one of the packaged food industry’s biggest breakups two years ago, told Reuters in an interview in December that he “reserves the right” to improve Kraft Heinz’s planned split.
The new plan by Cahillane is a departure from previous CEO Miguel Patricio’s rationale to split the company. Patricio had then said the complexity of Kraft Heinz’s “current structure” made it challenging to allocate capital effectively.
CHALLENGING ENVIRONMENT
The company said it would focus on marketing and research with a $600 million investment to drive recovery in its U.S. business where market conditions have worsened since it made the decision to split last summer.
Kraft Heinz, like other packaged foods companies, has been struggling with weak demand for its pricier condiments and pantry staples as consumers look for cheaper options.
The company also reported fourth-quarter results on Wednesday that fell short of estimates and forecast 2026 earnings below expectations.
It forecast 2026 organic net sales to fall between 1.5% and 3.5%, compared with estimates of a 0.17% rise and said the forecast included an impact of about 100 basis points from pressures related to the delay of food-stamp benefits in the U.S.
(Reporting by Juveria Tabassum Angela Christy in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty)
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