Warren Buffett is waking up to yet another headache in his portfolio this morning as Kraft Heinz shares are collapsing (down 10% pre-market) after the company announced dismal results and more impairments.
For the first six months of the year, EBITDA slipped 15% in the company’s home market. Net sales fell too as the company struggles to boost growth with its portfolio of brands.
“The level of decline we experienced in the first half of this year is nothing we should find acceptable moving forward,” Chief Executive Officer Miguel Patricio said.
The new chief admitted the company has “significant work ahead of us to set our strategic priorities and change the trajectory of our business.” The maker of Kraft Macaroni and Cheese and Jell-O has struggled to keep up with changing consumer tastes for healthier, less processed foods. On Thursday, it reported two new impairment charges totaling $1.2 billion.
As a reminder, Bloomberg notes that in February, news of an SEC investigation, weak profit numbers and a $15.4 billion writedown raised existential questions about management’s strategy, which focused on cost-cutting. An internal investigation also revealed accounting issues and forced the company to delay its results and financial filings.
Additionally, the company announced in May that it received an additional subpoena related to its procurement practices, which forced it to restate earnings for the last the three years. Kraft Heinz has said the changes are not material.
Investors looking for more information on the subpoena will have to wait for the call for more.