Kraft's revenue growth has stalled over the years since it merged with Heinz as consumers avoided older, well-established brands for newer products, cheaper private label brands and raw and
Shares fell 28 percent to a low of $ 34.51, wiping out $ 17 billion of the company's market value. In the middle of the afternoon, stocks fell $ 13.10 to $ 35.07.
<p class = "canvas-atom canvas-text Mb (1.0e) Mb (0) – sm Mt (0.8em) – https://tmsnrt.rs/2BNXPcJ ) "data-reactid =" 26 "> (Schedule: Kraft Heinz shares are crushed by the record – https://tmsnrt.rs/2BNXPcJ) Fall of rivals to food producers also fell, with General Mills, Conagra Brands Inc., Unilever and Nestle dropping between 1% and 3%.
Brazilian Buying Fund 3G Berkshire Hathaway Inc. together with Warren Buffett owns more than 50% of Kraft Heinz. 3G advocates the company to combat higher transport, commodity costs and slow growth, overcoming costs across the country.
"Investors have been asking for years whether the ultimate 3G tethering model will ultimately lead to brand erosion," said JPMorgan analyst Ken Goldman.
"We think the answer came yesterday in the form of intangible assets worth $ 15 billion for the Kraft and Oscar Mayer brands," Goldman said, lowering his rating to "neutral" than "overweight." On Thursday, Kraft Heinz, whose brands include Jell Gelatin Dessert and Velveeta cheese, reported a quarterly loss, said they would cut their dividends by 36%, and reported that the US Securities and Exchange Commission is investigating accounting policy of the company
in a deal designed by 3G. Under the leadership of 3G, the new company has begun a sharp cut in costs, which risks choking investment in innovation and marketing.
Warren Buffett publishes his annual letter to shareholders on Saturday and investors will search the document for any insight from the billionaire about his craft and 3G connection.
Under 3G, Kraft Heinz has adopted zero budgeting, a strategy designed to improve operating margins, which requires managers to justify all costs, from pencils to forklift trucks. Some analysts are now questioning the efficiency of the 3G model, given that the company's margins before interest and taxes have fallen to 23.2% in 2018 from 27.2% in 2015 when it was formed by Kraft Heinz.
"We see the 3G model as highly dependent on the conclusion of deals and the realization of synergies, and at some point having the best in-class margins, it does not matter whether the sales growth comes in the end, Ners Laurent Grande analyst said in a note "
" Kraft Heinz's results confirmed all our worst fears – plus more, "Grandet writes in a note
Stifel lowers shares to hold on to buy [+)]
Credit Suisse reduce your target price by $ 9 to $ 33, making it the lowest on Wall Street
the base and all "Credit Suisse analyst Robert Mossau writes," Credit Suisse analyst Robert Mosco
"Reducing dividends, Kraft and Oskar Meyer's trademark deletions, and direction for further sales reveal the distinctive features of a company. balance sheet, "Moscow said.
The news also affected investors of the company's bonds, about $ 31 billion of Craft Heinz bonds were among the most traded securities on the US corporate debt market on Friday morning, according to MarketAxess, and the yields of several o their biggest bonds was higher and lower prices with full point or more. 19659022] Spread on their bonds or the premiums demanded by investors as compensation for the possession of kraft paper for safer US securities expanded most during the entire period of the company's bonds
(Reporting by Siddharth Cavale and Nivedita Balu Bangalore, further report by Anna Driver, edited by Bernard Orr, Sveta Singh and Steve Orloffski)