AM I NEXT? IS THE HANDWRITING ON THE WALL AT KRAFT HEINZ? (PART 1)

Possible mass layoffs at Kraft Heinz.

2018 has not been kind to the 2015 merger between Kraft and Heinz companies, whose iconic brands are instantly recognized by almost everyone. As per the announcement of the 2018 yearly results, the outlook is clouded by unknowns.

  • Putting a happy face on a loss of $12.6 billion, Kraft Heinz CEO, Bernardo Hees noted, “Our fourth quarter and full year 2018 results reflect our commitment to re-establish commercial growth of our iconic brands, turn around consumption trends in several key categories, and expand into new category and geographic whitespaces. We are pleased with those actions, the returns on our investments, and the momentum built for 2019. However, profitability fell short of our expectations due to a combination of unanticipated cost inflation and lower-than-planned savings. Going forward, our global focus will remain on leveraging our in-house capabilities, developing our talented people, and delivering top-tier growth at industry-leading margins.”

  • The company adjusted the value of certain “goodwill” and intangible assets, including the Kraft and Oscar Meyer trademarks, downward by $15.4 billion.

  • Dividend cut by 36% from $0.625 per share to $0.40 per share and according to CEO Bernardo Hees, “We believe this action will help us accelerate our deleveraging plan, provide us strategic advantage through a stronger balance sheet, support commercial investments and set a payout level that can both grow over time and accommodate additional divestitures. By doing this we can improve our growth and returns over time.” 

  • Under “Supplemental Information,” the company noted that “The Company received a subpoena in October 2018 from the U.S. Securities and Exchange Commission (the "SEC") associated with an investigation into the Company's procurement area, more specifically the Company's accounting policies, procedures, and internal controls related to its procurement function, including, but not limited to, agreements, side agreements, and changes or modifications to its agreements with its vendors.” As per an “internal investigation,” the company “recorded a $25 million increase to costs of products sold as an out of period correction” and improved its internal controls.

Employees should continually check for signs of a mass layoff as one of the oldest CEO tricks in the book to increase profits and please Wall Street is to reduce costs and headcount.

There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?

 

AM I NEXT? THE HANDWRITING IS ON THE WALL AT DIEBOLD NIXDORF

Am I Next? Major losses as Diebold Nixdorf — followed by middle management layoffs.

Canton, Ohio-based Diebold Nixdorf, a maker of financial point of sale systems and ATMs has confirmed that their restructuring and cost-containment program named DN Now will result in approximately 1,600 layoffs, thinning the ranks of middle managers.

In responding to a question about head count reductions from JPMorgan Securities analyst Paul Coster, “… And my other question is on the head count reductions. Can you just talk to us about whether it's surgical or whether it's across the board? And I guess we're generally speaking kind of feel better if there were discrete functions being cut out or discrete products. But I think you get what I'm aiming at here, perhaps you can elaborate?”

DN CEO Gerrard B. Schmid responded, “Yes, sure. So let me just start at a high level. A lot of the focus of that effort has been to impact non-customer-facing roles. So we have not impacted our frontline services technicians nor our frontline sales force. We've really been looking at middle management roles in particular. There are 1,600 people roughly that are impacted by this effort. And as I said, 85% have exit dates. The work has been both surgical and across the board. This wasn't a blunt instrument approach that we adopted. It was a very, very analytical thoughtful look at spans of control, levels of management across the board.

Schmid went on to say, “We expect stronger cost savings from the new operating model we implemented during the quarter, and we also initiated a services modernization plan designed to improve service levels, enhance profitability and increase customer satisfaction. When combined with the actions we are taking to simplify our product portfolio, we are increasing our savings target to approximately $250 million annually by the end of 2021. We are also driving several other operational initiatives to improve our net working capital and efficiency levels, and expect these to add further savings in future quarters.”

Happy talk to Wall Street from a company who has recently reported a 38-year low, a 52-week stock price that fell from $22 to $3.42 on top of continuing losses of $212.6 million for the quarter ending September 30, 2018 which does not compare favorably with a loss of $36 million a year ago.

It can happen to anyone, anytime, anywhere ... are you wondering, Am I Next?