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© Reuters. FILE PHOTO – Heinz tomato ketchup bottles from the American food company Kraft Heinz are offered in a supermarket of the Swiss distribution group Coop in Zumikon
By Uday Sampath Kumar and Nivedita Bhattacharjee
(Reuters) – Kraft Heinz Co's shares fell 20% on Thursday after the food company reported a quarterly loss, revealed a SEC investigation and writes the value of its brands Kraft and Oscar Mayer, highlighting the difficult situation in the packaged food sector. .
The company's dismal results and forecasts, which is one of Warren Buffett's most important investments, reflect changes in consumption patterns from processed foods to healthier alternatives.
The collapse of late hours erased $ 12 billion from Kraft Heinz's stock market value and left its shares at their lowest level since HJ Heinz Co bought Kraft Foods Group Inc. (NASDAQ 🙂 in 2015, so to create the fifth largest food and beverage company in the world.
The $ 15.4 billion write-down reflects declining brand equity and other badet impairments, which means that the company believes these badets are worth less than before fusion.
"We plan to take a step back in 2019," said CFO David Knopf, during a post-earnings teleconference, promising "sustained earnings growth" starting in 2020.
Kraft, which owns the brands of Velveeta Cheese and Heinz Ketchup, is forecasting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 6.3 billion to $ 6.5 billion in 2019, which is below the estimates of 7 , $ 47 billion badysts, according to Refinitiv's IBES data.
Chief Executive Officer Bernardo Hees said the packaged food sector as a whole would still face a challenge due to the growing popularity of private labels and rising commodity prices.
"Kraft Heinz is in a worse position than many other consumer goods companies because of its very small portfolio of brands, which does not provide the level of growth needed in this type of market," said the Managing Director. from GlobalData Retail, Neil Saunders. .
The company, in competition with General Mills Inc. (NYSE 🙂 and Kellogg Co, reduced their quarterly dividend to 40 cents per share from about 63 cents per share on Thursday.
Buffett's Berkshire Hathaway (NYSE 🙂 Inc. and Brazil's 3G Capital control Kraft Heinz, based in Chicago.
In addition to lower than expected profits, the company announced that it had been summoned by the US Securities and Exchange Commission in October, as part of an investigation into its accounting policies, procedures and internal controls related to purchases.
The company said it was working on ways to improve its internal controls and determined that, to solve its problems, it had to record a $ 25 million increase in the cost of products sold.
"This has further aggravated a poor set of results, as it has also created uncertainty," Saunders said.
For the quarter ended December 29, Kraft recorded a net loss of $ 12.6 billion. He earned 84 cents per share on an adjusted basis, missing Wall Street estimates at 94 cents, according to Refinitiv's IBES data.
Net sales of $ 6.89 billion were below badysts' estimates of $ 6.94 billion for the quarter.
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