Kraft Heinz Co has received a second subpoena regarding its procurement practices and now has announced a plan to restate earnings, citing evidence that employee misconduct is the cause for the increase of products they sell. Essentially, this restatement relates to supplier rebates and other misstatements from 2016 to 2018, noting that they are now expected to be less than 2 percent on adjusted earnings per share for each year.
In all, the investigation and subsequent review require adjustments to the tune of approximately $208 million, related to the costs of products sold.
The packaged-food giant said, in a regulatory filing on Monday, they did not find any evidence of misconduct by senior management. The company delayed filing its annual report from earlier this year because of the investigation, which is now complete, so they should file the report soon. In addition, Kraft Heinz has also said it is taking remedial steps to prevent any future misconduct. These steps include personnel actions as well as changing some of the company’s internal controls.
In regards to the filing, a Kraft Heinz Co spokesperson said, “During the course of a through internal investigation, some discrepancies were uncovered which affected the way earnings were calculated between periods.”
With this filing, then, shares of Kraft Heinz gained more than 1 percent, but it still has a long way to go in terms of recovering from losses of 24 percent on the year so far. After all, the company took a $15.4 billion writedown, in February, and reported weaker-than-expected profit in addition to disclosing the US Securities and Exchange Commission (SEC) subpoena. Obviously, this events caused the company to tumble, explains Kraft Heinz Chief Executive Officer Bernardo Hees.
Kraft Heinz goes on to say, “While we don’t believe that the misstatements are quantitatively material to any prior period, due to the qualitative nature of matters identified, the Company determined that it is appropriate to correct the errors in previously issued financial statements. The company is taking action to improve our policies and procedures and will continue to strengthen our internal financial controls.”