Kraft Heinz must restate financial reports for a near three-year period to fix under-reporting costs and is facing a second subpoena from the top US regulator, the Warren Buffett-backed company disclosed on Monday.
The reporting errors originated from employee lapses in procurement practices, and the US Securities and Exchange Commission (SEC) subpoenaed the company in March over the assessment of goodwill and asset impairments, and a request for documents associated with the procurement operations, it said.
"The company is taking action to improve our policies and procedures and will continue to strengthen our internal financial controls," Kraft Heinz spokesman Michael Mullen said.
The condiments giant said it did not find any evidence of misconduct by senior managers in its investigation, which is now complete, but did disclose it found evidence of employee misconduct that increased the cost of products sold.
The effects of the restatements for 2016, 2017 and part of 2018 for supplier rebates and other misstatements are expected to be less than 2 per cent for each year on adjusted earnings per share, the packaged-food giant said in the regulatory filing.
Kraft Heinz has been reeling since February, when it took a $15.4 billion write down, reported weaker than expected profit and disclosed a subpoena from the SEC. Monday's filing revealed that the misstatements would increase the amount by about $13 million.
Due to these findings, the company said it would not be able to timely file its quarterly report for the period ended March 30.
Last month, the company said that chief executive Bernardo Hees, who has led the company since it was created in 2015 merger, will be replaced by Miguel Patricio, as of July. The ongoing saga has sent shares spiraling, down as much as 24 per cent so far this year.
"While we expect there will be more change, the worst of the uncertainty surrounding financial statements appears to be over," Consumer Edge Research's Jonathan Feeney told Reuters.
In an interview on Monday with CNBC, Mr Buffett, whose Berkshire Hathaway is Kraft's largest shareholder, said he had been briefed earlier about the restatement issues.
“The company has my confidence,” Mr Buffett said. “If we had just bought Heinz, it would have been a better investment.”
