Kraft Heinz is losing customers

Kraft Heinz faced the consequences yesterday of its decision to maintain dividend payouts to Warren Buffett and other shareholders despite its $28 billion debt burden, as two credit rating agencies raised concerns over the strength of its balance sheet. Fitch cut its credit rating on the food company from investment grade to junk status while Moody’s put it on notice for a possible downgrade. Their moves came a day after results showed the maker of Heinz ketchup, HP Sauce and Kraft macaroni and cheese is still losing customers… Fitch reduced its rating one notch from BBB- to BB+ and warned that Kraft may need to raise $9 billion from disposals to reduce leverage to the levels that executives have said they are targeting. The $28 billion debt burden is a legacy of the 2015 mega-deal engineered by Mr Buffett and Brazilian-US investment group 3G Capital that created Kraft Heinz. If maintained throughout the year, the 40 cents quarterly dividend would cost the company an estimated $2 billion and be worth about $500 million to Mr Buffett’s Berkshire Hathaway, which holds a near 27 per cent stake. 3G owns 20 per cent… Shares in Kraft Heinz were down 4 per cent in afternoon trading on Friday, bringing the fall in market value to 38 per cent since the start of 2019. 

Alistair Gray