Bill Johnson, the former Heinz CEO, tells FOX Business the company's troubles stem from shifting its focus to cutting costs while trying to drive up current margins.
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“I don’t think they have the right people to do that. I’ve lost a lot of confidence in what’s going on there,” he said on “Cavuto: Coast-to-Coast” Monday.
Earlier this month, the maker of Heinz ketchup and Kraft Mac and Cheese reported it would cut its dividend and 2019 profits would fall below expectations. The stock price has lost 24 percent already this year.
“The stock has gone from a high of close to $90 [per share] I guess down to the low $30s and I think there’s a real lesson here in their zeal to cut cost and so forth they removed all the intuitional knowledge and therefore no one can tell them what they shouldn’t do because it has been done before and it hadn’t worked,” Johnson said.
In 2015, H.J. Heinz Company and Kraft Foods Group Inc. merged in a deal valued around $49 billion to create the third-largest food and beverage company in North America. Warren Buffett’s Berkshire Hathaway and private equity firm 3G Capital combined the consumer-goods giants to form The Kraft Heinz Company.
“We paid too much for Kraft,” he told FOX Business’ Liz Claman during an interview ahead of Berkshire’s annual shareholder meeting in Omaha, Nebraska.
As for Buffett's admission, Johnson was not surprised.
“I think Mr. Buffett has no choices but to undergird it because he’s got so much invested in it,” he said.