How KHC (The Kraft Heinz Company) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a consumer packaged foods leader like KHC Income Statement Overview makes money is essential for investors and anyone interested in the business of food and beverage manufacturing. In this post, we break down KHC's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick KHC Overview

KHC Income Statement Overview (KHC) operates as a global food and beverage company, producing and marketing branded packaged foods and condiments. Its portfolio includes iconic brands across sauces, cheese, meats, and snacks, distributed through retail, foodservice, and international channels. Revenue comes primarily from the sale of packaged foods in North America and international markets, with business segments reflecting geographic regions.

Revenue Breakdown

• Total Revenue (Q3 2025): $6.24B (−2.3% YoY)
  • Other Revenue by Geography: $4.64B (74.4% of total, −3.8% YoY)
  • International Revenue: $1.60B (25.6% of total, +2.5% YoY)
  • Growth is powered by international expansion and brand strength, though North American sales faced modest declines.

Gross Profit and Margins

• Gross Profit: $1.99B (31.9% gross margin)
  • Cost of Revenue: $4.25B (+1.2% YoY)
  • KHC maintains moderate margins due to its scale, strong brands, and ongoing cost management initiatives.
• Most costs come from raw materials, manufacturing, and logistics required to produce and distribute packaged foods.

Operating Income and Expenses

• Operating Income: $1.03B (flat YoY, 16.4% margin)
• Operating Expenses: $965M (+12.3% YoY)
  • SG&A: $930M (+13.6% YoY, 14.9% of revenue) — includes marketing, sales, administrative, and distribution costs to support global brands and operations.
  • R&D: Not separately disclosed; typically a smaller portion for packaged food companies, focused on product innovation and reformulation.
  • KHC continues to invest in brand support and international growth while managing costs in a competitive market.

Net Income

• Pre-Tax Income: $807M (flat YoY, 12.9% margin)
• Income Tax: $194M (24.0% effective tax rate)
• Net Income: $615M (flat YoY, 9.9% net margin)
• KHC converts a moderate portion of sales into profit due to its global scale and brand-driven pricing power, despite rising operating expenses.

What Drives KHC's Money Machine?

• Packaged Foods Sales: Over 74% of revenue comes from North America and other core geographies, with international markets contributing 26% and growing.
• Brand Portfolio Strength: Leading brands drive shelf space, pricing power, and customer loyalty, supporting stable cash flows.
• Strategic Investments: Increased SG&A reflects investments in marketing, digital transformation, and international expansion.
• Future Growth Areas: International markets and new product innovation, though not yet the largest profit contributors, are key to long-term growth.

Visualizing KHC's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with cost of revenue and SG&A expenses taking the largest chunk.
• Even after significant brand and international investments, 9.9% of revenue drops to the bottom line.

Key Takeaways

• KHC's money comes overwhelmingly from packaged food sales in North America and international markets
• High gross and net margins illustrate the power of KHC's brand-driven, scale-based business model
• Heavy investment in marketing and international expansion, balanced by efficiency in operating costs
• Ongoing growth is driven by international sales and brand innovation

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FAQ About KHC's Income Statement

1. What is the main source of KHC's revenue in 2025?

KHC generates over 74% of its revenue from packaged food sales in North America and other core geographies. International sales contribute 26% and are a growing part of the business.

2. How profitable is KHC in Q3 2025?

KHC reported net income of $615M in Q3 2025, with a net margin of approximately 9.9%, reflecting moderate profitability driven by brand strength and global scale.

3. What are the largest expense categories for KHC?

The biggest expenses on KHC's income statement are cost of revenue (raw materials, manufacturing, logistics) and operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $930M in Q3 2025 as KHC invests in marketing and international expansion.

4. Why does international revenue operate at a lower margin?

International revenue, despite generating $1.60B in Q3 2025, faces higher distribution and marketing costs as KHC invests aggressively in global market share, believing these will drive long-term growth—even if margins are lower today.

5. How does KHC's effective tax rate compare to previous years?

KHC's effective tax rate in Q3 2025 was 24.0%, consistent with previous years. This moderate rate is primarily due to the company's international structure and available tax benefits.