Kraft Heinz shares plunge after $15 billion write-down, investigation

Kraft Heinz shares plunged 20 percent before the opening bell Friday after disclosing an investigation by federal regulators. It also said it will slash the value of its Kraft and Oscar Mayer brands by $15.4 billion.

The company disclosed the investigation and the write-down in its fourth-quarter earnings report, which it issued late Thursday. Kraft Heinz also said it lost $12.6 billion in the quarter.

The overnight stock price plunge represents a $3.2 billion hit alone for its largest investor, Warren Buffett’s Berkshire Hathaway, which owns more than 26 percent of the company’s outstanding shares.

Kraft Heinz divulged the receipt of a subpoena in October from the U.S. Securities and Exchange Commission related to its procurement operations. Those operations handle interactions with outside suppliers.

The company’s CFO, David Knopf, said during a conference call with analysts Thursday that the company conducted “a very thorough internal investigation” after it learned about the SEC scrutiny.

“We determined that we should have recorded $25 million in prior periods, which we booked in” the fourth quarter,” Knopf said. “And to put into context, that compares to our overall procurement spend of over $11 billion, which excludes big four commodities spend.”

Knopf said the company’s $15.4 billion write-down was related to the declining values of its food brands in three divisions: Kraft natural cheese, Oscar Mayer cold cuts, and its Canada retail business.

–With reporting by the Associated Press.

Categories: Business, US & World News

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