Kraft Heinz plunges near record low on SEC subpoena, $15.4 billion writedown

Chicago Illinois. Kraft Foods Group Inc. said it will merge with H.J. Heinz Co. to form the third largest food and beverage company in North Ameri

Chicago Illinois. Kraft Foods Group Inc. said it will merge with H.J. Heinz Co. to form the third largest food and beverage company in North Ameri

Formed in a 2015 merger orchestrated by Warren Buffett and the private equity firm 3G Capital, Kraft Heinz's portfolio plays mainly in the center of the grocery store, an area hit hard by secular shifts in eating and shopping habits, and the one at greatest risk of being disrupted by Amazon.com Inc.

All this and weak fourth quarter earnings figures caused the stock price to be down almost 21% in after market trade.

In its earnings release, Kraft Heinz said it received a subpoena last October related to its "accounting policies, procedures, and internal controls related to its procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to its agreements with its vendors".

Kraft Heinz shares plummeted as much as 17 percent as of 5:55 p.m.in NY.

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"By doing this we can improve our growth and returns over time", said CEO Bernardo Hees.

After launching an investigation into its procurements accounting, Kraft Heinz said it recorded a $25 million increase in its cost of products sold after determining the amount was "immaterial" to previous reporting periods.

21 reported a loss of $12.6 billion for the quarter ended December 29, 2018, compared with earnings of $8 billion for same period a year ago.

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. It earned 84 cents per share on an adjusted basis, missing Wall Street estimates of 94 cents, according to IBES data from Refinitiv.

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