<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Shares of Kraft Heinz, in which billionaire Warren Buffett's Berkshire Hathaway Inc and Brazilian private equity firm 3G own major stakes, fell about 4%. “data-reactid =” 23 “> Kraft Heinz shares in which Berkshire Hathaway Inc. of billionaire Warren Buffett has a stake and Brazilian private equity firm 3G, which holds large shares, fell about 4%.
Chicago-based Kraft Heinz, which had written off $ 15.4 billion in key brands like Oscar Mayer hot dogs last year, struggled to grow sales as consumers switched to healthier options and private labels.
“Following Kraft’s comment on the operational headwind in 2020 and its commitment to maintain the dividend, Fitch estimates that the company may have to sell up to 20% of its forecast 2020 EBITDA to support debt reduction,” the agency said.
Kraft Heinz said in a post-earnings call on Thursday that currency fluctuations, divestitures, supply chain costs and bonuses related to the turnaround would likely result in a $ 460 million decrease in earnings before interest, taxes, depreciation and amortization (EBITDA).
“We believe it is important for Kraft Heinz shareholders to maintain our dividend at this time of transformation,” said Kraft Heinz in response to the drop in creditworthiness.
Fitch lowered its long-term rating for the company from ‘BBB-‘ to ‘BB +’ but kept its outlook stable.
The BB level or “junk” rating for companies has a higher risk for lenders. (Https://bit.ly/2OV2Kin)
Regardless, Moody’s has revised its rating outlook from “stable” to “negative” and expects the declining operating performance and high levels of debt to continue through 2020. (Https://bit.ly/2SsK1x1)
As of August, Kraft Heinz will be rated “BBB-” by S & P, the lowest investment grade rating. At least eight Wall Street analysts lowered their price targets for the stock after the company reported disappointing results.
(Reporting by Nivedita Balu in Bengaluru; editing by Anil D’Silva)