Blog: Heinz flags turbulence in Venezuelan currency
Katy Askew | 12 May 2014
Industry watchers have said food companies in Venezuela are finding it hard to obtain foreign currency
This morning (12 May) we ran an in-depth look at the impact policy decisions in Venezuela are having on the food industry in the country.
Our Caracas-based correspondent, Andrew Rosati, argued a lack of access to US dollars - the currency of trade for Venezuelan companies - is causing necessary imports to dry up. At the same time, government controls on pricing mean food manufacturers are unable to cover costs. These are significant problems for the sector prompting some to even warn of looming food shortages.
However, while some domestic manufacturers and a number of national industry associations were vociferous in their criticism of government policy, unsurprisingly perhaps, multinational corporations were more reticent.
It was interesting to note in Heinz's first-quarter filing with the SEC, then, that the company flagged issues in Venezuela and the "highly inflationary" economy in the country.
"On February 8, 2013, the Venezuelan government announced the devaluation of its currency relative to the U.S. dollar, changing the official exchange rate from 4.30 to 6.30. As a result, the company recorded a $43m pre-tax currency translation loss, which was reflected within other expense, net, on the condensed consolidated statement of income in the first quarter of 2013," the firm said.
More than that, the company had to reduce the value of its assets in the country due to exchange rate issues. "The amount of net monetary assets and liabilities included in our Venezuelan subsidiary's balance sheet was $124.7m" at March 30, 2014," Heinz said.
With industry giants including Nestle, General Mills, Mondelez International and Cargill all boasting a significant presence in Venezuela it will be telling to see if these issues persist - and the extent to which they impact others in the sector.
Sabra Dipping Co., the venture between PepsiCo and Israel's Strauss Group, is set to double production capacity at its hummus making facility in Virginia to meet "growing consumer interest" in fresh d...
The discounter has, alongside its fellow German retailer Lidl, shaken up the UK grocery market. And today (28 September) it outlined plans to grow its business in the country further....
Genetically modified ingredients is a hot issue, nowhere more so than in the US. Most food makers in the country, through a number of industry organisations, maintain GMOs are safe and insist their us...
Indian conglomerate Tata Group is reportedly planning a "big bang" entry into the Indian e-commerce space....
Zambeef has said underlying annual losses will be lower than market expectations after factors that hit the the Zambia-based food group in its first half eased in the second part of its financial year...
Businesses from across the food industry pledged support for renewable energy, greener supply chains and fresh efforts to put the brakes on destruction at the United Nations 2014 Climate Change Summit...
- How Windsor buy is part of Ajinomoto's global push
- Focus: Fonterra's bid to weather dairy volatility
- Industry awaits WHO reply on beefed-up ad pledges
- On the money: Diamond's faith in on-trend range
- Focus: Does size matter for Thai Union Frozen?
- Kellogg, Burton's, Ulker "on UB bid shortlist"
- Kerry, Premier team up on frozen NPD in UK
- Nestle sells baby food brands Alete, Milasan
- Nestle forms new unit to "leverage scale"
- PepsiCo eyes Middle East growth with R&D centre