Food manufacturer Kraft Heinz is having a miserable time: a billion dollar net loss is coinciding with a investigation into the company's accounting and a German boycott. Shareholders did not take kindly to the matter.
Accumulation of bad news
In the fourth quarter of financial year 2018, Kraft Heinz suffered a net loss of 12.6 billion dollars (11 billion euros). In addition, the company announced that it would be deducting 15.4 billion dollars (just below 14 billion euros) from the value of its brands, meaning that the concern assumes that those brands are (much) less valuable now than at the time of the merger in 2015. The affected brands include cheese label Kraft and meat manufacturer Oscar Meyer, two divisions that have been hit by the trend towards healthier food.
To make matters worse, the multinational received a subpoena from stock regulator SEC, which will be investigating the company's accounting. This accumulation of bad news has caused the stock value to nosedive, which rather displeasing its owners (Warren Buffet's Berkshire Hathaway and 3G Capital). They were the ones who organised the merger between Kraft and Heinz, promising to raise margins through synergy and saving on expenses. That approach has not worked out and is increasingly being criticised.
As if all of that was not yet enough, German market leader Edeka has started a boycott against Heinz Ketchup bottles. Or rather: due to a dispute on raised prices, Heinz refuses to deliver to them any more. Edeka's response in Lebensmittel Zeitung was sharp: "We can not allow capital funds to refinance their deals at the expense of our customers"...