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THE KRAFT HEINZ COMPANY

(KHC)
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Kraft Heinz : , execs to pay more than $62 mln over U.S. accounting scheme charges

09/03/2021 | 09:46am EDT
The Kraft logo is pictured outside its headquarters in Northfield

WASHINGTON, Sept 3 (Reuters) - The Kraft Heinz Company and two former executives have agreed to pay more than $62 million to settle charges they falsified supplier contracts to achieve cost savings in a multi-year accounting scheme, the U.S. securities regulator said on Friday.

The food company engaged in an array of accounting misconduct from the last quarter of 2015 to the end of 2018 during which it improperly inflated key earnings for investors, the Securities and Exchange Commission (SEC) said on Friday.

The alleged misconduct began as a result of a "cost savings gap" leading up to Heinz's 2015 merger with Kraft and continued for years amid pressure to make good on promises the new company would "deliver on certain cost savings," according to SEC documents.

Kraft restated its financials in June 2019 after the launch of an SEC probe, correcting $208 million in improperly recognized cost savings from nearly 300 transactions, the regulator said.

Kraft, which did not admit or deny the SEC's findings, said in a statement that it fully cooperated with the SEC's investigation and has taken "remedial action and proactive steps" to boost its policies and controls for financial reporting.

The Chicago-based company agreed to pay a $62 million civil penalty and not commit future violations as part of its agreement with the SEC. Kraft recorded the penalty in the second quarter of 2021, the statement said.

Former chief operating officer Eduardo Pelleissone, who was accused of negligence-based anti-fraud and other controls violations, agreed to pay a penalty of $300,000 and another $14,000 in disgorgement.

Former chief procurement officer Klaus Hofmann agreed to pay $100,000 and was barred from serving as a public company officer or director for five years in a settlement that is pending court approval.

Neither executive admitted or denied the SEC's findings. Lawyers for both did not respond immediately to requests for comment.

Warren Buffett's Berkshire Hathaway Inc owns about 26% of Kraft Heinz. Prices of Kraft shares were little-changed on Friday. (Reporting by Chris Prentice and Susan Heavey in Washington Additional reporting by Jonathan Stempel in New York; editing by Emelia Sithole-Matarise and Steve Orlofsky)


© Reuters 2021
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Financials (USD)
Sales 2021 25 364 M - -
Net income 2021 2 857 M - -
Net Debt 2021 18 448 M - -
P/E ratio 2021 18,5x
Yield 2021 4,40%
Capitalization 44 507 M 44 507 M -
EV / Sales 2021 2,48x
EV / Sales 2022 2,55x
Nbr of Employees 38 000
Free-Float 53,7%
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Mean consensus HOLD
Number of Analysts 20
Last Close Price 36,38 $
Average target price 41,42 $
Spread / Average Target 13,9%
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Managers and Directors
Miguel Patricio Chief Executive Officer & Director
Paulo Basilio Chief Financial Officer
Alexandre Behring da Costa Chairman
Flavio Torres Head-Global Operations
Gregory Edward Abel Independent Director
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