Why Kraft Heinz Is Halting Plans to Split in Two

Speakers

Red Browne — Bloomberg Reporter

Kraft Heinz has halted plans to split the company, citing the need to stabilize the business first after four consecutive quarters of double-digit earnings declines.
The company is suffering from a "pricing issue" where its products are priced higher than competitors, leading to volume declines; they must now invest heavily in price reductions and R&D to regain market share.
Berkshire Hathaway (Warren Buffett) has started unwinding its position, signaling a significant vote of no confidence in the current trajectory.

Ticker	Direction	Speaker	Thesis	Time
KHC	AVOID	Red Browne Bloomberg Reporter	The company is pausing its separation plan because it is not yet in a "strong position," evidenced by "four straight quarters of double digit declines in earnings" and falling volumes. Additionally, "Berkshire starting to unwind their position earlier this year" signals that the most prominent investor is backing away. The cancellation of the split removes a key bullish structural catalyst. Fundamentally, the admission that they need to "invest in price" indicates future margin compression as they lower costs to stop volume bleed. The combination of deteriorating fundamentals and a major shareholder (Buffett) selling creates a negative feedback loop. The stock faces headwinds from both operational restructuring (lower margins) and capital flows (Buffett selling). It is an "avoid" until the new CEO proves the turnaround is working. If the "investment in price" rapidly restores volume growth without destroying margins, the stock could re-rate.	0:00