US foods giant Kraft Heinz saw its shares plummet by more than quarter after posting a huge losses and revealing it was the focus of a federal investigation.
The $ 12.6bn (£9.7bn) hit reported in the latest quarter by the company, which makes iconic products like tomato ketchup and baked beans, is in contrast to the $ 8bn (£6.1bn) profit recorded for the same period last year.
It reflects changes in consumer trends away from processed foods to healthier alternatives, which has clashed directly with some of the firm’s most well-known products, such as Jell-O, Kool-Aid and Oscar Mayer hot dogs.
The loss has been largely blamed on the company slashing the value of its household brands by $ 15.4bn (£11.8bn).
On top of this, the trading update also revealed Kraft Heinz is the subject of an inquiry by the Securities and Exchange Commission over it deals with suppliers.
Kraft Heinz’s chief executive Bernardo Hees told investors: “We are overly optimistic on delivering savings that did not materialise by year-end.
“For that, we take full responsibility, and we have taken steps to ensure this does not happen again by planning process, procedures and organisation structure.”
The 26% slump in shares was the biggest single-day decline seen by the company.
Chief financial officer David Knopf said the firm expected to “take a step backwards in 2019”, but promised “consistent profit growth” starting in 2020.
GlobalData Retail managing director Neil Saunders said: “Kraft Heinz is in a worse position than many other consumer packaged goods companies because it has got a very weak portfolio of brands.
“They are not delivering the level of growth that’s needed in this sort of market.”
On the investigation, Mr Saunders added: “That has really made a bad set of results even worse because it has also thrown some uncertainty into the mix.”.