Kraft Heinz Co reported weak sales on Thursday, prompting the maker of packaged ...
3G, Kraft Heinz’s second-biggest shareholder, has used its so-called zero-based budgeting cost-strategy successfully at holdings including Heinz and Anheuser-Busch. The controversial budgeting tool requires managers to justify their expenses annually from scratch, rather than use the prior year as a guide or pursue cost savings on an ongoing basis.
Kraft Heinz needs to pivot from cost-cutting and instead focus on efficiency and a stronger balance sheet, the company’s new CEO Miguel Patricio said on a call to discuss earnings. Patricio, a 30-year marketing veteran from Anheuser-Busch InBev , was named to the role in April. “Setting short-term targets publicly won’t be productive as we set and work to deliver against our strategic directions and priorities.
The company took a charge of about $744 million on its U.S. refrigerated, Latin American exports and Brazil units among others, blaming lower five-year operating forecasts. It also booked an impairment charge of about $474 million in the second quarter to write down the value of six brands, including Velveeta and Cool Whip. The impairment charges are preliminary and subject to finalization of control procedures, it said.
This marks Kraft Heinz’s second major writedown since Feb. 21, when the company knocked $15.4 billion off the value of its Kraft and Oscar Mayer brands, posted a surprise quarterly loss, and disclosed a U.S. Security and Exchange Commission investigation into its accounting practices.
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