Kraft Heinz, the third-largest food and beverage company in North America and the fifth-largest in the world, finally filed its annual report for 2018, three months late on 7 June. “We are pleased that Kraft Heinz is returning to a path of normalization,” said Alex Behring, Chairman of Kraft Heinz’s Board of Directors. “The adjustments to correct prior year misstatements are in line with the preliminary amounts disclosed in our Form 8-K filed on May 6, 2019.”
While Friday afternoon filings tend to contain ‘bad’ news, there was some relief in the US markets that Kraft Heinz’s figures showing misstatements, which understated the costs of goods sold by $208 million, came as no real surprise following previous guidance. The firm said its investigation had found that "several" employees in procurement had engaged in misconduct regarding the recognition of costs and rebates.
The annual report includes restated audited consolidated financial statements as of 30 December 2017, and for the years ended 30 December 2017, and 31 December 2016, as well as restated unaudited interim financial statements for the quarterly periods ended 29 September 2018; 30 June 2018; 31 March 2018; 30 September 2017; 1 July 2017; and 1 April 2017.
The company says the misstatements were not quantitatively material. However, due to the qualitative nature of the matters identified in an internal investigation, including the number of years over which the misconduct occurred and the number of transactions, suppliers, and procurement employees involved, Kraft Heinz determined that it would be appropriate to correct the misstatements.
The cumulative impact of the restatements to previously reported amounts from 2015 to 2018 is less than 1% of net income/(loss) for each applicable period. These misstatements are consistent with what the company disclosed on 6 May 6 2019.
The company said its own internal investigation into procurement and an assessment of internal controls is now complete but that the company continues to cooperate with the Securities & Exchange Commission in the latter’s ongoing investigation.
