Kraft Heinz is facing a crisis. From October 2018 the financial regulator SEC is investigating in relation to her dealing in the accounting documents. Did not mention about it in the November report, says CNN. Concealment of information has become a “time bomb”, causing a wave of confidence to the top management and a negative trend in the stock. CEO of Kraft Heinz Bernardo Heath resigned, and sales are falling due to the mismatch between product desires of consumers.
8 Aug Kraft Heinz reported on the preliminary results for the first half of 2019, the Report is not provided within the period on form 10-Q, has unnerved investors. Analysts see the reason for the delay of the financial report in conducting an internal investigation on the background check of accounting documents by the Commission on securities and stock exchanges.
According to the report, in the first half of 2019 Kraft Heinz sales fell 5% compared to the same period in 2018 Profit for the first half of 2019 amounted to 854 million (70 cents per share) vs. 1.76 billion dollars (USD 1.43 per share) in 2018 Revenue fell to 12.37 billion in 2019 against 12,99 billion last year. A loss from depreciation was estimated at more than $ 1.2 billion.
After the publication of the preliminary report, the company’s shares Kraft Heinz fell by 15% in early trading to a new historic low. The new value was the worst in the S & P 500. Since the beginning of 2019 they have already lost almost 40%.
Since July the company Kraft Heinz came a new CEO – Miguel Patricio. He has called the report for the first half unsatisfactory. According to him, will have to carry out serious work to change a situation: you need a new business strategy.
February 22, 2019 the company’s shares fell by 28%. She lost 17 billion dollars of its market value and “pulled” for a the consumer sector of the market. Besides, then she announced a reduction in dividend by more than a third and spoke about the SEC investigation.
In June 2019 internal investigation in Kraft Heinz ended, while checking SEC is still ongoing.
Kraft Heinz is experiencing hard times not only because of problems with accounting, but due to low sales. She was the worst player in the S & P 500. Its main shareholder Warren Buffett (27%) and his company Berkshire Hathaway is also a problem.
The reason for the low sales see decrease in demand for products. The consumer is looking for in stores healthy food and products Kraft Heinz are far from that. But instead of having to reconfigure the production to the consumer, reduce costs and solve problems with reporting. Innovative products that meet consumers ‘ expectations, is inhibited.
In addition, the Heinz company Kraft, according to “КазахЗерно.kz” lagging behind the competition. Though she first put on the market veggie Burger under the brand Boca Burger, but now falls behind the success of other companies operating in the segment of healthy food. To return to the former position, it is necessary to understand the consumer better than others.
While other big companies make deals to absorb small Kraft Heinz idle. For example, in 2014, General Mills acquired the company-manufacturer of organic food Annie’s; in 2017 Hershey bought Amplify SkinnyPop Snack Brands, and in 2018 – B & G Foods; in 2018 ConAgra acquired Pinnacle, and the Smart Balance brand of food, gluten free Udi.