(Bloomberg) – Kraft Heinz Co. Signed a $ 15.4 billion non-cash fee to write down assets, including some of the best-known brands, a striking acknowledgment that changing consumer tastes has ruined the value of some of the company's most iconic products.
The fees resulted in a net loss of $ 12.6 billion, or $ 10.34 per share. Power Heinz shares fell as much as 18 per cent from 6:30 pm onwards. in New York.
Kraft Heinz's portfolio, formed in a merger in 2015 organized by Warren Buffett's Berkshire Hathaway Inc. and the private equity firm 3G Capital, plays primarily in the midst of the grocery store, an area severely affected by secular shifts in eating and shopping habits, and the biggest risk of being disturbed by Amazon.com Inc.
The company has tried to spruce up a tired range of brands – from organic Capri Sun to natural Oscar Mayer sausages. But the bigger question in investors has been the management's ability to draw from the large, transformative agreements that shareholders demand.
Kraft Heinz tried to buy Unilever in 2017 in a move that could have made the management do what it does best: Slash overhead costs. But Unilever settled $ 143 billion deal, and the Kraft Heinz shares have since lost about half the value, as investors are waiting for the next big move.
On Thursday, the company's fourth-quarter earnings lost even the lowest analysts estimate. It also flagged investors in the quarterly results a summons it received last year from the US Securities and Exchange Commission in connection with procurement practices. Kraft Heinz said that as a result of an investigation by an external lawyer, it recorded a $ 25 million "increase in the cost of products sold."
Berkshire Hathaway's investment was reduced from a valuation of around $ 15.7 billion to $ 12.9 billion as the stock plunged to $ 39.66 at 18:15 in New York. Thursday's announcements mark the second time this year that a Berkshire owner has revealed unfavorable news after the markets were closed and damaged the shares. Apple Inc. trimmed its revenue outlook in January, pummeled by its shareholders. This stock has since recovered.
Kraft Heinz will cut quarterly dividends to 40 cents per share from 62.5 cents, helping it to pay off debt faster and adapt to its smaller size after selling some businesses. The company had paid dividends in the highest proportion of revenues from its American food parcels.
(adds Buffett investment in Chapter 8.)
– With help from Katherine Chiglinsky.
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