Kraft Heinz Company is a global food producing giant capable of strengthening its position as the fifth largest food producer in the world, but an overvalued 2015 merger has harmed the immediate outlook for the company.
Charges as a result of the goodwill and intangible assets in its latest results capped off a terrible 2018 for the company, in which attributed to a common shareholder loss of $12.6bn and diluted loss per share of $10.34 – representing a huge write-down in a sector that seldom sees figures of that magnitude pushed around.
Announced in its Q4 earnings, Kraft Heinz incurred charges of $15.4bn to lower the carrying amount of goodwill and intangible assets, referring to the Kraft and Oscar Mayer brands, which attributed to a common shareholders loss of $12.6bn and diluted loss per share of $10.34.
Big shifts in consumer spending, as people continue to move towards healthier fresh food diets, have harmed performance. Kraft Heinz is also facing increasingly stiff competition from supermarkets where their own brands are becoming more popular.
Industry analysts have downgraded Kraft Heinz Company following the bad news as they feel the uncertainty surrounding the future of the company is too difficult to predict future good fortune.
The company needs to recreate some solid foundations by keeping their well-established brands relevant, adapt to consumer trends where possible, and not shy away from its accounting troubles. Being honest with investors and consumers would instill some confidence back into the company and its brands.
With difficult economic conditions around the world for food producers, Kraft Heinz is very well positioned to bounce back, but the company will have to think long-term and expect its current share price to drop further before it begins to recover from this mess.