Kraft Heinz, the food giant whose products include Jell-O and Oscar Mayer meats, on Thursday released a surprising batch of bad news that included a multibillion dollar write-down signaling a plunge in the value of some of its most famous brands. In addition to the $15.4 billion write-down, Kraft Heinz said that last year it had received a subpoena from the Securities and Exchange Commission related to an investigation into the company’s accounting and controls. It also reported disappointing fourth quarter earnings that led some analysts to ask whether the company’s stringent controls on costs might be backfiring. The company’s stock was down almost 27 percent as trading began on Friday. Kraft’s chief executive, Bernardo Hees, said the company’s earnings fell short because it did not deliver sufficient cost savings. “For that, we take full responsibility,” he said Thursday on a call with investors and analysts. The huge write-down appeared to come from a shift in how consumers eat, emphasizing fresh food over processed products. The write-down reduced the value on the balance sheet of United States and Canadian operations and the Kraft and Oscar Mayer trademarks, the company said. Kraft and Heinz, two stalwarts of grocery store aisles, merged in 2015 in a deal that combined the investments of 3G Capital, a Brazilian private investment group, and Warren E. Buffett’s Berkshire Hathaway. Together, the two investment firms owned nearly half of Kraft Heinz at the end of last year. Mr. Buffett stepped down from the company’s board last year. But the company has struggled with both the changing tastes of shoppers and with cutting costs. On that latter issue, the S.E.C.’s scrutiny could add to investor concerns. Kraft Heinz said that the regulator looked at “agreements, side agreements, and changes or modifications to its agreements with its vendors.” With external accounting and legal advisers, Kraft carried out an investigation that led to it recording a $25 million increase in costs in the fourth quarter. The company said it should have recorded the $25 million in earlier periods. Kraft’s chief financial officer, David H. Knopf, said on the investor call that the misstatement “was not material to our current and prior year financial statements.” Kraft said it would make changes to reduce the chances of making similar accounting missteps in the future, adding that it was continuing to cooperate with the commission. 3G Capital is well known for pursuing lower costs at the companies it owns. One analyst on Thursday pressed Mr. Hees on whether Kraft’s belt-tightening had gone too far and was now damaging some of its most prominent brands. “We still believe strongly that our model is working and has a lot of potential for the future,” Mr. Hees said.
Food company Kraft Heinz has revealed it received a subpoena the end of last year from the US Securities and Exchange Commission looking at "agreements, side agreements, and changes or modifications" to vendor deals and a misdeclared $25m payment. The announcement came as Kraft Heinz reported a $15.4bn writedown resulting from a consumer switch from processed products to fresh foods, and prompted the company's share price to slide by more than one fifth. In addition, some analysts questioned whether the firm's cost-cutting drive had gone too far.