Kraft Heinz Puts the Brakes on Releasing Turnaround Details
Kraft Heinz will delay details about its turnaround strategy until May, postponed from the March date originally expected.
CEO Miguel Patricio said he wanted to wait until Carlos Abrams-Rivera came in as the company’s new head of the U.S. zone before the strategy was unveiled. Abrams-Rivera joined in February from Campbell, where he served as president of Campbell Snacks.
“I wanted to make sure we have his full input as we detail our multiyear plans for the bottom up before we present it to you,” Patricio said in an earnings call.
Calling 2019 a “very difficult year” for the company, Patrico said Kraft Heinz is now seeing the beginning of stabilization.
The company reported fourth-quarter net sales of $6.5 billion, down 5.1% versus the prior-year period. Full-year sales were $24.98 billion, down 4.9% from 2018’s $26.27 billion.
The company is demonstrating greater cost control in the supply chain for its U.S. business, Patricio said, but more work needs to be done for its international markets. And while the company has also struggled with talent retention, he said he now has a team in place that’s “the experienced, diverse team I was hoping to build.”
Patricio joined the company last year from Anheuser Busch InBev, where he was chief marketing officer.
“2020 will be the first full year of what we expect will be a three-stage turnaround,” said Patricio, “a turnaround characterized by laying the foundation for the future growth, fueling our flagship brands and accelerating growth platforms, and then hitting our stride on both the top and bottom lines. And during our May investor meeting, our Kraft Heinz team will describe what we are doing to strengthen our foundation and drive a new chapter for our company.”
The company had its credit rating cut to junk following its earnings release by Fitch Ratings and S&P Global Ratings, losing its investment grade status. Paulo Basilio, Kraft Heinz CFO, indicated the move was somewhat anticipated, noting in the earnings call: “Investment-grade status also remains important to us, but we understand that the decline of our leverage may not come as rapidly as desired.”