Kraft Heinz Announces ‘Ongoing Evaluation,’ Which Could Mean Asset Sales
With Berkshire Hathaway apparently losing interest and sales below the year the company was formed, Kraft Heinz Co. said it’s “evaluating potential strategic transactions to unlock shareholder value.” Read that: Brands are for sale.
“There can be no assurance that the company’s assessment process will result in any transaction, or any assurance as to its outcome or timing,” a May 20 announcement read. “The company has not set a timetable for completion of this process and does not intend to make any further announcements regarding the process unless and until it determines that further disclosure is appropriate or necessary.”
Yesterday’s announcement also noted that Berkshire Hathaway Inc. “has informed the company that, consistent with its other non-controlled investments, it will no longer hold board seats on Kraft Heinz. As such, Timothy Kenesey and Alicia Knapp have stepped down from the board due to their relationship with Berkshire Hathaway. With these changes, Kraft Heinz has reduced the size of its board to 10 members.”
Well, that’s one cost-savings.
“Mr. Kenesey’s and Ms. Knapp’s decisions are not the result of any disagreement with management or the board related to the company’s operations, policies or practices,” the May 20 statement said.
Warren Buffett’s Berkshire Hathaway, along with Brazilian investment firm 3G Capital bought Heinz and took it private in 2013. Two years later they engineered a merger with Kraft, which was publicly traded and the resulting company became public. In the early days, 3G Capital was a hands-on manager while Berkshire Hathaway kept a low profile.
In 2016, the first full year after the merger, sales were $26.487 billion. Sales declined every other year since, although they hit a high of $26.64 billion in 2023. Last year’s sales were $25.486 billion.
Among the financial misses of its history, the company’s restated 2018 financials recorded a loss of $10.25 billion on sales of $26.27 billion.
There have been some small dispositions over the years, and it was widely rumored last year that the Oscar Mayer meats business was being shopped, possibly Maxwell House coffee, too -- but no buyers surfaced. After six straight quarters of sales declines, a semi-major makeover may be coming.
In Kraft Heinz’s first-quarter earnings report, sales dipped just below $6 billion for the three months, down from $6.4 billion the year earlier. All three reporting segments contributed to the decline: North America sales decreased 7%, international developed markets dipping 4.4% and emerging markets slipping 4.7%.
Net income for the quarter was $714 million, down from $804 million the year before.
