Kraft Heinz Inc. shares led to record stocks in retrospective trading Thursday after the giant food conglomerate had delivered bad news without spices to sweeten it.
shares doubled more than 20% in the extended session, and sent stocks lower than $ 39; the stock has not fallen below $ 41 since Kraft was spun out of what is now Mondelez International Inc.
MDLZ, + 0.88%
which doubled 0.6% in extended trading Thursday. Kraft Heinz concluded Thursday's ordinary trading session with a market value of nearly $ 59 billion, suggesting that the company's valuation could be cut by more than $ 10 billion if the losses persist in Friday's trading session.
In its earnings report on Thursday, Kraft Heinz revealed a number of concerns:
• Fourth quarter results were much easier than expected. On an adjusted basis, the company claimed earnings of 84 cents per share, down from 90 cents per share and lower than the average analyst estimate of 94 cents per share. Revenue increased to $ 6.89 billion from $ 6.84 billion, but remained below the consensus estimate of $ 6.94 billion, according to FactSet.
• Without adjustments, this bottom line looks much worse. Kraft Heinz reported quarterly losses of $ 12.61 billion, or $ 10.34 per share, thanks to a write-down of over $ 15 billion related to a falling valuation of several of its businesses, particularly the Kraft and Oscar Mayer brands.
The company slashed its dividend by more than a third, at a quarterly rate of 40 cents per share from 62.5 cents per share.
• Oh, there is also a survey of Kraft Heinz's accounts that resulted in a summons from the Securities and Exchange Commission that the company revealed in the announcement.
Managers did not say that the problems should be solved in 2019 either. In fact, they pointed to 2020 while predicting an adjusted EBITDA profit totaling $ 6.3 billion to $ 6.5 billion this year, down from $ 7.08 billion in 2018 and well below the average analyst's estimate of $ 7.5 billion. dollar, according to FactSet.
While we expect to take a step back in 2019, we are still confident of delivering consistent profit growth from 2020 onwards, driven by the full utilization of our benefits, cost structures and capabilities, says Finance Director David Knopf in a conference call Thursday afternoon .
Kraft Heinz does not offer any more specific figures for the 2019 forecast, which is typical of the company. The Ebitda forecast was out of character for a company that usually does not provide specific guidance.
Knopf also revealed that the company is considering the sale of named companies this year to pay off debt. Kraft Heinz has already announced two plan assets, and that profits from these sales will also go towards the restructuring of the debt burden.
Knopf also took a closer look at the SEC survey in Thursday's conference call.
"The company was notified by the SEC about an investigation of the company's procurement area. Following this, we conducted a thorough internal investigation with the support of an independent law firm and accounting firm, and we decided that we should have reported $ 25 million in previous periods as we booked in Q4 2018, says Knopf. "To put it into the context, how it compares, overall procurement was over $ 11 billion, which excludes Big Four commodity spending. So this misinformation was not material to our current or past annual accounts, and finally we implemented several improvements to internal controls and took measures to reduce the likelihood of this happening again. "
Even before any decline in servicing, the Kraft Heinz shares have fallen 28.6% in the past year, as the S&P 500 index
has gained 2.7%.