Kraft Heinz shares plunged more than 18% in after-hours trading on Thursday after the company disclosed that it had received a subpoena from the SEC. The whiff of the accounting scandal drove the company's shares below $40 a share, to their lowest level ever.
Kraft said the subpoena was part of an investigation into the company's procurement accounting policies, and that, after it received the subpoena, it launched an internal investigation and as a result posted a $25 million increase to the cost of products sold after determining it was "immaterial to the fourth quarter of 2018 and its previously reported 2018 and 2017 interim and year to date periods." It also posted a $15.4 billion impairment charge, as the company cautioned that "the fair values of certain goodwill and intangible assets" were "below their carrying amount."
Kraft added that it was cooperating in the probe and has been taking steps to improve its internal controls and procedures. The subpoena, which was disclosed in the company's Q4 earnings report, isn't expected to have a material impact on its financial statements, the company said, according to CNBC.
Kraft Heinz cautioned that "the fair values of certain goodwill and intangible assets" was "below their carrying amount."
On top of the subpoena, Kraft Heinz posted a miss on its earnings, reporting EPS of 84 cents on $6.89 billion in revenue. Those results fell short of Wall Street expectations for EPS of 94 cents on revenue of $6.93 billion, according to Refinitiv consensus estimates.