Thursday , August 18 2022

SEC opens an investigation into calculating Kraft


Kraft Heinz has received a subsidiary accounting by the US Securities and Exchange Commission and has issued an infringement charge and dividend break, sending shares in the food company joining after-hours trading.

The subpoena, and the company said that it had been received in October, related to "accounting policies, procedures and internal controls" in procurement.

Kraft Heinz said he had launched his own investigation thereafter and increased the costs of his products sold as a result of $ 25m.

"The company is in the process of implementing some improvements to internal controls to mitigate the likelihood that this will happen in the future and have taken other remedial measures," he said, adding that he cooperate "fully" with the SEC.

"The company does not expect the issues that are subject to the investigation to be relevant to the current period or any previous period financial statements," he added .

The disclosure came to the SEC as the company said that it would break its dividend by more than a third and paid for a $ 15.4 billion deficit, pushing the food group to lose $ 12.6 billion on for the fourth quarter.

Kraft Heinz, whose brands range from Oscar Mayer's hot dogs, also says he reduces his quarterly dividend to $ 0.40 per share, or $ 1.60 per year – down from $ 2.50 per year.

He sent the share news in the Chicago-based group down by more than 20 per cent in trading after hours to just over $ 38.

The results are the latest recovery for Kraft Heinz, which has been fighting rapidly changing customers, assaulting in advertising markets and distribution shifts. Even before the latest sales sales have fallen by around a third since joining 2015.

David Knopf, chief financial officer, said that Kraft Heinz, whose long-term debt burden amounted to $ 30.9bn at the end of 2018, fails to recover assets with "no clear path to competitive advantage".

The company recorded the non-cash charge as it reduces the value of goodwill in its retail and refrigerator retail businesses in the United States and Kraft and Oscar Mayer brands.

Mr Knopf stated that the writing mainly reflected "peripheral expectations" due to the performance of Kraft Heinz in the second half of last year, driving "supply chain issues". He also referred to a higher "discount rate", which means steep interest rates have reduced the current value of cash flow in the future.

Kenneth Goldman, an analyst at JPMorgan, challenged executives for their explanation of the poor results. "Companies generally do not take writers because recent performance is poor and because discount rates have risen," he said, asking if the problem was "wider and longer term".

He added that "constant financial disappointments in Kraft" have been.

The company was formed by the 2015 megamerger of Kraft and Heinz and engineered by the Brazilian 3G Capital investment company and supported by Warren Buffett. But the paper drew attention to investor concerns that the incredible cost-cut 3G famous for him has hurt the business.

"If they are [investors] ask. . . if the 3G belt tightening strategy goes too far and damages brands. . . At least some evidence does not begin to refer to it & # 39; there? "said Mr Goldman.

Chief Executive Bernardo Hees said: "We still believe that our model works and we have a lot of potential for the future."

He added that the managers were "disappointed" according to levels of profitability. "We're extremely optimistic about delivering savings that were not relevant," he said.

The net loss of compared to a net income of almost $ 8 billion last time. Net sales during the three months up to the end of December were not changed from one year ago, at $ 6.89bn.

Despite the disadvantages, he noted that the company was still looking forward to making contracts in the future.

The dividend dividend and relocation would give Kraft Heinz "the flexibility of the balance sheet for future merger – so that we can be a combination – if the industry goes that way".

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