Kraft Heinz is pumping the brakes on plans to break up the company, with its new CEO saying the food giant’s challenges are “fixable and within our control” as it shifts focus toward reigniting profitable growth through a $600 million investment push.

In a note in the company’s routine fourth quarter report, CEO Steve Cahillane said that instead of splitting up, the company will double down on rebuilding growth — backing that up with a massive investment in the brand’s marketing, sales and research and development.

“When I decided to join Kraft Heinz, I knew that this was an exciting opportunity to contemporize iconic brands, better serve consumers and customers, and build meaningful shareholder value,” Cahillane said in the press release.

“Since joining the company, I have seen that the opportunity is larger than expected and that many of our challenges are fixable and within our control,” he continued. “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.”

MCDONALD’S PLANS MASSIVE OVERHAUL WITH MAJOR CHANGES TO RESTAURANTS AND MENUS

“As a result, we believe it is prudent to pause work related to the separation and we will no longer incur related dis-synergies this year.”

Kraft Heinz announced in September that its board of directors approved a plan to split it into two independent, publicly traded companies through a tax-free spinoff. The aim was to create two more focused organizations with less complexity that would be able to maximize their brands and boost profitability.

Cahillane was slated to lead the business it is calling Global Taste Elevation, overseeing brands like Heinz, Philadelphia and Kraft Mac & Cheese. The other company, called North American Grocery, would oversee its portfolio of grocery staples like Oscar Mayer, Kraft Singles and Lunchables.

As of December, the official names of the new companies were not yet determined, and the company also had not announced who would lead its North American grocery business.

In the fourth-quarter report, Kraft Heinz also announced its commitment of $600 million to marketing, sales, research and development, product improvements and select pricing initiatives across 2026. Cahillane said Kraft’s strong balance sheet and $3.7 billion in free cash flow gives it the financial flexibility to fund this push while still generating excess cash.

“We are confident in the opportunity ahead and believe this investment will accelerate our return to profitable growth,” he said.

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While leadership is optimistic, Kraft’s 2025 numbers showed clear strain — full-year net sales were down 3.5% to $24.9 billion, organic sales were down 3.4%, volume was down 4.1%, and adjusted operating income was down 11.5%.

Kraft’s biggest pressure points were in coffee, cold cuts, frozen meals, bacon and select condiments, as inflation in commodity and manufacturing costs outpaced efficiency efforts. The company reported an operating loss of $4.7 billion last year, largely driven by “non-cash impairment charges.”

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FOX Business’ Daniella Genovese contributed to this report.

Paramount has enhanced its

hostile offer to acquire all of Warner Bros. Discovery

WBD

0.68%

increase; green up pointing triangle, including agreeing to pay the $2.8 billion termination fee Warner would owe its chosen suitor, Netflix

NFLX -3.15%

decrease; red down pointing triangle, should that deal collapse.

In a regulatory filing, Paramount also said it was adding a “ticking fee” of 25 cents per share, which it would pay to Warner shareholders for each quarter its deal hasn’t closed, starting in January 2027.

Indian IT stocks have felt pressure recently as global developments in artificial intelligence spark fresh concerns among investors. News of China ramping up its AI innovation, coupled with new product launches from international AI platforms, has triggered a wave of sentiment-driven selling in the sector.

Speaking to ET Now, Sushovan Nayak from Anand Rathi highlighted the broader context behind this market reaction. “So, basically as you would be aware, Anthropic coming up with its [product] after that there was this Altruist, which was a [platform] which basically also got released and then the China bit which you are mentioning. So these will have a sentimental negative impact on Indian IT,” he said.

Nayak added that while these developments could create short-term pain, the long-term fundamentals of Indian IT remain strong. “The question is, if you look at, let us say, an OpenAI or an Anthropic, both of them are planning to go public. So, they will come up with these plug-ins almost at regular intervals. Each time they come up with that it will be another death knell on Indian IT, but I believe that this is going to be much more resilient. But there will be some short-term pain, which obviously we are going through, so that is what my limited submission is.”

He emphasized the continuing importance of implementation and customization of software, where Indian IT firms maintain a competitive edge. “At the end of the day, you need to implement and customise those softwares. So that is where Indian IT comes through. And with those hyperscalers putting in the amount of capex—like earlier in 2025 it was almost $400 billion for the top four, now coming to $600 billion—at the end of the day you need to have cloud transformation, data governance, data cleaning, and all of that stuff, where you end up becoming implementation partners for either a Databricks or a Snowflakes, who will [require] significant amount of work,” he noted.

When asked about valuations, Nayak said he is cautiously optimistic. “I would want to see how these folks go about, like both OpenAI and Anthropic, because if they keep on releasing such disruptive models every alternate day, then we become sentimentally negative. Obviously, I would gradually increase my buying in these, but I would possibly start looking at them for sure. I mean, Infosys has obviously been top pickers and will continue to be—it is such that these are disruptive times, so yes, that is a way I will look at it.”

Regarding opportunities in the market, Nayak expressed confidence in large-cap IT stocks. “As I had also mentioned earlier, we basically are still positive on large-cap IT, and I completely understand that there is legacy IT work that is also there which will potentially get disrupted. But the ones within the large-caps which are most adaptable or are leveraging on their gen AI tools to a larger extent, someone like an Infosys, someone like an LTIM or an HCL Tech, these are the ones which we like,” he said.
He further highlighted HCL Tech’s ER&D exposure as a source of resilience. “HCL Tech, because of the ER&D exposure, because 75% of their business is services and the other 25%—that is 15% ER&D, 10% would be around HCL Software—I think that would be a little more resilient in all of this. But as I said, this is more of sentimental things rather than creating a very structural decline in all of them, that is what at least my view is, but stand corrected on this.”Despite the current nervousness, experts suggest that Indian IT’s structural strengths and ability to partner in global AI and cloud initiatives should help the sector navigate these uncertain times.

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Markets have seen a shift in sentiment following the finalisation of the US-India trade agreement, with foreign institutional investors (FIIs) beginning to return after months of heavy selling. However, despite policy stimulus and improving quarterly numbers, concerns over earnings growth and the disruptive impact of artificial intelligence on jobs and business models are emerging as key risks.

Speaking to ET Now, Marcellus Investment Managers’ Founder Saurabh Mukherjea said the long-anticipated US-India free trade agreement has been a major trigger for renewed foreign investor interest.

“As we expected for many months, the US-India FTA would be the trigger, the comfort that foreign investors need to reconsider India seriously. Those months that America had a 50% tariff slammed on us, we really were not in the reckoning globally. I do not think any foreign investor would seriously consider us then. But now that it looks like the worst is behind us and the proper FTA itself will get signed in a couple of months, foreign investors are interested again.”

However, Mukherjea cautioned that serious foreign inflows are still being held back by a lack of confidence in earnings growth, despite multiple policy measures aimed at reviving the economy.

“What is holding back serious money is still the lack of confidence in earnings growth. Earnings growth has been decent this season, better than Q2 which was dismal. But given the potency of the GST cut, of the income tax cuts that the FM delivered last year, and 125 bps of rate cuts, it is literally full-on stimulus to juice up the economy. Given all of that, the earnings are still not doing justice to the sheer effort the government and the RBI are putting in to revive the economy, and that is worrying several investors including us.”

While pockets such as FMCG and automobiles have delivered stronger results, Mukherjea said broader consumption has not shown the buoyancy many had expected. He pointed to artificial intelligence as a key structural factor weighing on middle-class employment and spending.
“There are bright spots. FMCG has had a good earning season, auto has been having a good earning season now for a couple of quarters. But across the piece, in totality, we are still not seeing the buoyancy in consumption that we had expected. And the reason for that is the AI impact. I think jobs are going. Companies are obviously keeping quiet about it, but jobs are going.”He added that the impact is already visible in certain real estate markets.

“You can see the impact on real estate markets such as Hyderabad and Bangalore where residential real estate demand has conked off pretty seriously, and that is something we now need to take into account.”

With the trade deal largely in place, Mukherjea said his firm is increasing exposure to export-oriented manufacturers, but warned that the broader focus will now shift to how deeply AI affects employment and consumption.

“The US trade deal is done, or the crux of it is done. People like us are beginning to increase weights in export-oriented manufacturers. We are hoping to make more money from our export-oriented manufacturing plays. But a lot of focus will now shift on what is the potency of AI’s impact in terms of taking out middle-class jobs.”

Addressing the ongoing weakness in IT services stocks, Mukherjea said the selling pressure may not be over yet, pointing to similar trends playing out in the US.

“There is plenty to go here. If you just step back and think about it, there is a broader story. If you look at the selloff in America in the brokerage and wealth management names, the broker and wealth management names have lost almost 20% of their market cap in America this week.”

He said markets are increasingly discounting the vulnerability of intermediary-driven business models.

“What the market is increasingly discounting in the United States is not just traditional coding, but almost any type of information intermediation. Any business which is in the business of taking lots of data, condensing it, and giving the customer a view and then a service on the back of that view — whether it be hotel bookings or IT services or strategy advice or stock recommendations — that whole piece is at risk.”

Mukherjea warned that this disruption will extend well beyond IT services and could fundamentally reshape multiple white-collar industries, including asset and wealth management.

“I do not think this is going to be limited to IT services. The disruption AI is causing is a fundamental rebuilding of business models not just in IT services but even say in our industry.”

On the future of large IT services firms, Mukherjea outlined three major layers of impact: consolidation, changes in the nature of services, and a sharp reduction in employment.

“The first is that I do not think there will be this many IT services companies a decade out. We have too many IT services companies not just in India but across the world, and there simply is not that much need.”

He said the nature of IT services will also shift away from traditional coding.

“The type of service will change. It will be far less time and materials. It will be far less coding. There will be far more business architecture and strategy advice bundled into it.”

Most significantly, Mukherjea expects employment levels in the sector to fall sharply.

“By orders of magnitude, the number of people employed in this industry will reduce. Just to give a broad sense, I think TCS employs 600,000 people. Microsoft would be around 200,000–250,000. A firm like OpenAI will be around 2,000, and DeepSeek employs 200 people.”

He added that job losses are already visible in data from recruitment platforms.

“From what I can see in the Naukri numbers, this sector is shedding jobs already at the rate of 10–15% a year. So that story has a long way to go.”

Mukherjea concluded that while export manufacturing may benefit from global trade realignments, AI-led disruption will force multiple industries to rethink business models and employment structures over the coming years.