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.
Amid significant pressure on profits from its Splenda sucralose business, UK-based food ingredients group Tate & Lyle has this morning (21 April) announced plans to try to "maximise returns"....
Four campaign groups in the US have urged the country's Food and Drug Administration to close a "loophole" in regulations on food additives and bring the rules - due to be finalised by August next yea...
The Cargill meat processing facility in Hazleton, Pa., has become the company's first certified landfill-free production site. ...
- Nomad's post-Iglo opportunities
- Focus: Can Arla jump-start UK flavoured milk?
- Comment: Nestle reacts to world of 3G and Buffett
- PepsiCo underlines the challenge on health
- Hershey's long-term confidence on China
- Arla to launch protein dairy drink in UK
- Pork Farms' Kerry pastry deal nears green light
- Hershey cuts sales forecast on forex and China
- Bongrain investors approve name change
- Arla launches "nutrient-enriched" milk in UK