By: Yassmine ElSayed
CAIRO, Feb. 24 (SEE) – Global Kraft Heinz's share price
has plunged to a record low amid signs that customer appetite for the company's
processed foods is weakening.
The US food giant's stock dropped 27% after it reported flat
2018 sales and said it would write down the value of its Kraft and Oscar Mayer
brands by $15.4bn.
The firm also said its accounting practices were under
investigation. But said it did not expect that inquiry to be
"material" to financial results.
The firm reported a $10.2bn loss for 2018, driven by flat
sales of $26.2bn and the write-down on the brands.
Kraft Heinz blamed the 2018 shortfall on higher
manufacturing and logistics costs.
"We were overly optimistic on delivering savings that
did not materialize by year-end." Kraft-Heinz chief executive Bernardo
Hees said.
Results were also affected by the decision to cut prices in
the US in an effort to boost shopper demand.
Mr. Hees said he was encouraged by revived appetite for
brands such as Philadelphia creamed cheese. The firm also plans to increase
prices this spring.
But executives warned that profit growth would not return
until 2020, as the firm's results are hit by a weaker first quarter, currency
fluctuations and sales of parts of its businesses.
Kraft Heinz, like others in the industry, is facing
increased competition from less expensive, retailer brands, as well as growing
consumer preference for non-processed food.
"Our industry has been and is likely to remain
challenged," Mr Hees said.
The firm's shares, which have been sliding for about two
years, fell below $35yesterday.
Kraft Heinz also recorded $25m in extra costs in the fourth
quarter following an internal review triggered by an inquiry by the US
Securities and Exchange Commission into accounting practices within its
procurement pision.
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