Kraft Heinz has disclosed an investigation by federal regulators and will slash the value of its Oscar Mayer and Kraft brands by $15.4 billion.
Shares plunged more than 20 percent before the opening bell Friday after the company posted a stunning $12.6 billion loss for the fourth quarter.
Kraft Heinz divulged the receipt of a subpoena in October from the U.S. Securities and Exchange Commission related to its procurement operations. Those operations handle interactions with outside suppliers. The company said that it is fully cooperating with the SEC.
Kraft Heinz completed its own investigation into the matter and recorded a $25 million charge to account for higher costs and expenses that should have been accounted for previously.
The Pittsburgh company said that it is making improvements to its internal controls and taking other actions to prevent similar mistakes going forward.
The nearly $13 billion loss in the most recent quarter is a devastating recognition that efforts to change the trajectory of the company have not been as successful as once thought. The loss follows an $8 billion profit in the same period last year.
Kraft Heinz and other food makers that dominated grocery shelfs for a good portion of the last century have been whipsawed by a seismic shift in what consumers want.
Families, particularly in the U.S., have pivoted sharply away from processed foods and toward more simple and fresh ingredients. That has clashed directly with some of Kraft Heinz’ most well-known brands like Jell-O and Kool-Aid and Oscar Mayer hot dogs.
Details of the investigation emerged in the company’s fourth-quarter earnings report late Thursday.