US food manufacturer and distributor Kraft Heinz reported its fourth-quarter earnings results on Thursday. Sales for the quarter fell by 5 percent and missed to hit analysts' forecast, resulting in a drop in the company's stocks.
The company is apparently still struggling to adapt to the rapidly changing consumer taste, which has steered away from its core processed food products. Another big contributor to its relatively poor performance for the quarter is the recent accounting issues it had faces, which had attracted the attention of regulators last year.
Overall earnings for its fourth quarter did beat analysts' estimates, but it apparently failed to ease investor's concerns for its future outlook. Following the release of its earnings results, Kraft Heinz's share prices fell by 8 percent. Last year, the company's shares had fallen by nearly 40 percent.
Over the past three years, its shares had lost close to 70 percent of its value. The company's fourth-quarter performance also managed to hurt major shareholders, including one of its biggest backers, Warren Buffett's Berkshire Hathaway. Some of the company's other backers, including private equity firm 3G, had already sold their stakes amid the consecutive worse-than-expected quarters.
Kraft Heinz CEO Miguel Patricio, who was brought on board as its head last year, acknowledged in a press release published on Thursday that the company's 2019 results were indeed disappointing. However, the executive who replaced former CEO Bernardo Hees vowed to make significant improvements this year. Patricio elaborated that they will be looking into "deep consumer insights" in order to make the investments necessary to enhance the company's various brands.
Last year was not a particularly good year for the struggling company, particularly after it managed to surprise investors with a series of write-downs. The company first announced a $15 billion writedown of its Kraft and Oscar Mayer brands in July. It then followed that up with a $500 million write-down of a number of its poor performing brands in August. The poor performing brands that were written down included famous brands such as Maxwell House, Miracle Whip, and Velveeta.
It is not yet clear if Kraft would be writing even more of its product down this year. Patricio did mention that he was confident in turning around the company but warned that it will take some time to achieve that goal. The executive did promise that the company will be making significant progress towards the goal this year and its main focus will be to lay down an even stronger foundation for its future growth.
