Kraft Heinz Co. (NASDAQ: KHC) released a fourth-quarter earnings report that deeply disappointed investors. The food giant, known for its boxed macaroni and cheese and its ketchup, reported a net loss of $12.61 billion for the quarter. The company reported profit of $8 billion in the same quarter a year ago.
The results for the quarter included a $15.4 billion write-down on the value of two of its best-known brands, Oscar Mayer and Kraft. The company now expects those brands to generate future earnings that are about 25 percent lower than what was expected just a few months ago. The massive downward adjustment reduced shareholder equity by roughly 23 percent.
The company also announced that it would slash its dividend to 40 cents per share from 62.5 cents per share, a dividend cut of 36 percent. The combined news sent Kraft Heinz shares plummeting 27 percent. The sell-off slashed its market value by $16 billion to $42.1 billion.
Kraft Heinz has been struggling with slowing sales and rising costs. The company’s overall sales have been stagnant since the third quarter of 2015. Changes in consumer eating habits have played a big part as more consumers turn to fresh foods over packaged products. The company has tried to lure these consumers with new products like organic Capri Sun drinks and all-natural Oscar Mayer hot dogs, but adoption has been slow.
Kraft Heinz is now considering asset sales to generate funds to pay down its debt. The company currently has $31 billion of debt, which is more than 4.5 times its earnings before interest, tax, depreciation and amortization (Ebitda). It has already agreed to sell its Indian beverage and Canadian cheese brands for more than $1.8 billion. Other businesses may also be on the chopping block, but the company has not specified which ones they may be.