USA, Chicago. The Kraft Heinz Co. said its earnings statements for fiscal years 2016, 2017 and through the third quarter of fiscal 2018 “should no longer be relied upon, because of certain misstatements.”
The investigation also found misstatements related to certain supplier contracts and arrangements where the allocation of value should have been recognized over an applicable contractual period. The company could not determine if supplier contract misstatements were related to the misconduct found in procurement.
As a result, Kraft Heinz Co. identified required adjustments of approximately $208 mill., of which $27 mill. was recorded in the fourth quarter cost of products sold.
“The cumulative net misstatements to the previously furnished or reported annual and interim financial statements were approximately $181 mill., which, when reflected over the relevant periods, resulted in misstatements that are not quantitatively material to any prior year or quarter, but would have been significant to the fourth quarter of 2018 if corrected in that period,” the company said.
For the fourth quarter of fiscal 2018, ended 29 December, 2018, the Kraft Heinz Co. wrote down the value of its Kraft and Oscar Mayer brands by $15.4 bn. As a result, the company sustained a loss of $10,292 mill. for the year, which compared with income of $10,999 mill., equal to $9.03 per share on the common stock, in fiscal 2017. In the fourth quarter, Kraft Heinz sustained a loss of $12,608 mill., which compared with income of $8,003 mill., or $6.57 per share, in the same period a year ago. Last year’s results included an income tax benefit of $6,665 mill.
With adjustments, Kraft Heinz’s fiscal 2016 net income fell $20 mill. to $3,622 mill., fiscal 2017 net income declined $69 mill. to $10,921, and the loss recorded in fiscal 2018 was $10,265 mill. compared to the previously announced $10,292 mill.
The company also disclosed it received an additional subpoena from the SEC on 1 March related to its assessment of goodwill and intangible asset impairments and related matters and is cooperating.
It is against this backdrop that Miguel Patricio will become CEO of Kraft Heinz on 1 July. He was named the new CEO on 22 April 22 and is succeeding Bernardo Hees, who has led the company since 2015.