Bottles of Heinz Kraft Co. Heinz brand Tomato Ketchup and Yellow Mustard are arranged for a photograph in Dobbs Ferry, New York, on Wednesday, Feb. 20, 2019.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Kraft Heinz said in a filing Monday it will restate its financial statements for 2016 and 2017.
Shortly after the filing with the Securities and Exchange Commission was released, Warren Buffett, who has a $10.6 billion stake in Kraft Heinz through Berkshire Hathaway, told CNBC's Becky Quick, "The company has my confidence."
Kraft Heinz disclosed in February a $15 billion write-down on its Kraft and Oscar Mayer brands, as well as an investigation by the SEC into its accounting and procurement practices.
The SEC investigation launched an internal review of Kraft Heinz's procurement accounting and procedures. The review caused Kraft to delay filing its annual report twice and Standard & Poor's to put the company on CreditWatch negative.
"During the course of a thorough internal investigation, some discrepancies were uncovered which affected the way earnings were calculated between periods," a Kraft Heinz spokesperson said in a statement to CNBC. "While we don't believe that the misstatements are quantitatively material to any prior period, due to the qualitative nature of the matters identified, the Company determined that it is appropriate to correct the errors in previously issued financial statements."
"The findings from the investigation did not identify any misconduct by any member of the senior management team. We are pleased to report that the investigation is now substantially complete," the statement added.
After the filing Monday with the SEC, Kraft Heinz shares lost 2.6% in premarket trading amid a broad sell-off for the market.
Berkshire Hathaway, Kraft Heinz's largest shareholder, said Saturday it was forced to exclude Kraft Heinz's results from its first-quarter earnings report because it had not yet seen the food company's financials.
Berkshire Hathaway and private equity firm 3G Capital created Kraft Heinz by merging Kraft Foods and H.J. Heinz in 2015. The investment team previously worked together to take Heinz private two years prior.
But the Kraft Heinz deal has created headaches for Buffett. More recently, Buffett has been asked to defend 3G's once-lauded operational excellence, as Kraft Heinz's performance has deteriorated. Shares of the food giant have tumbled more than 24% through the year. The company in February reduced its dividend by 36%.
Berkshire Hathaway in February wrote down over $3 billion related to its investment in Kraft Heinz.
Buffett has since said he overpaid for Kraft.
"Time usually works it out but it means capital could have been better deployed in other areas. You can always pay too much for a business. I've done it with stocks many times; I've done it with businesses," Buffett said Monday. "At Berkshire, we have at least a half dozen businesses — and I can't even use a 'we' there — I've got to say I paid too much."
Buffett last year stepped down from the Kraft Heinz board to decrease his travel commitments. Berkshire's Tracy Britt Cool and Gregory Abel still sit on the company's board.
– CNBC's Fred Imbert contributed to this report.
https://www.cnbc.com/2019/05/06/kraft-heinz-to-restate-earnings-for-2016-and-2017.html
2019-05-06 10:25:39Z
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