Kraft Heinz, which booked more US$700m of impairment charges in the first nine months of 2019, said today (13 February) it had added to the amount during the final quarter of the year.
The Heinz ketchup maker filed around non-cash impairment charges of “approximately” US$453m to lower the carrying amount of goodwill in its operations in Australia and New Zealand, as well as its Latin America Exports businesses.
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Kraft Heinz also booked a further $213m in non-cash impairment charges to lower the carrying amount of the Maxwell House trademark.
The charges meant over 2019 as a whole Kraft Heinz had run up charges of just shy of $1.2bn after another tranche of $744m in the first half of the year.
Last February, when Kraft Heinz reported its financial results for 2018, it included a $15.4bn writedown of goodwill in the numbers.
News of the latest charges came alongside the publication of the company’s financial figures for the fourth quarter of 2019 and for the year as a whole.
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By GlobalDataIn the three months to 28 December, Kraft Heinz’s net sales fell 5.1% to $6.54bn. Stripping out disposals and exchange rates, the Oscar Mayer meats maker’s net sales dropped 2.2% on an organic basis. Pricing was up two percentage points but volume/mix dropped 4.2%.
Kraft Heinz posted a fourth-quarter operating income of $594m, against an operating loss of $14.14bn in last year’s fourth quarter, hit by the mammoth writedown.
Similarly, Kraft Heinz made net income of $182m in the final three months of 2019, versus a net loss of $12.59bn in the last quarter of 2018.
In 2019 as a whole, Kraft Heinz generated net sales of $24.98bn, down from $26.29bn in 2018.
The company’s annual operating income was $3.07bn, against an $10.21bn operating loss in 2018. Kraft Heinz’s 2019 net income was $1.94bn versus a loss of $10.19bn a year earlier.
“While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated,” Kraft Heinz CEO Miguel Patricio insisted. “We have taken critical actions over the past six months to re-establish visibility and control over the business. And we remain convinced Kraft Heinz has the potential to achieve best-in-class financial performance as we begin transforming our capabilities and making necessary investments in our brands based on deep consumer insights. Our turnaround will take time, but we expect to make significant progress in 2020, laying a strong foundation for future growth.”
