“3G Capital and Berkshire’s $45 billion merger of Kraft and H.J. Heinz in 2015 gave Berkshire 26.7% ownership of Kraft Heinz and 3G Capital a 29% stake.”
The two companies teamed up together for the merger of Kraft Heinz (KHC) because the stock boasted a good dividend of nearly 4% and had fallen in value which sparked Warren Buffett’s curiosity toward the company.
Fast forward to Kraft’s recent quarter performance: The company reported a nearly 2% increase in revenue compared to its year-ago operations but a discouraging 33% drop in profits due to its annual goodwill impairment testing and higher costs.
Kraft also recorded a $164 million impairment charge in relation to its goodwill assets in Australia and New Zealand and $101 million impairment loss in Brazil. Without these impairments, the ketchup maker would still have delivered a 5.2% decline in profits brought by higher operating costs.
The problem for Berkshire Hathaway now is, can they make their investment pay off for BRK shareholders with declining profits and stock prices for Kraft Heinz (KHC)?