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Kraft Heinz to Pay $62M to Settle Allegations — Report
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Kraft Heinz to Pay $62M to Settle Allegations — Report

Global consumer packaged food and beverage firm Kraft Heinz (KHC) has reached an agreement with the Securities and Exchange Commission (SEC) to pay $62 million over allegations that it operated an expense-management scheme that yielded numerous annual restatements, according to a report by StreetInsider.com.

Furthermore, the commission has charged Kraft’s ex-CPO Klaus Hofmann and ex-COO Eduardo Pelleissoneand for their role in the scheme. The Pennsylvania-based company produces and sells food and beverage products like coffee, refreshments, meals, meats, sauces, dairy and other grocery products.

The SEC said, “The company engaged in various types of accounting misconduct, including recognizing unearned discounts from suppliers and maintaining false and misleading supplier contracts, which improperly reduced the company’s cost of goods sold and allegedly achieved cost savings.”

Kraft Heinz operated the scheme from the fourth quarter of 2015 until the end of 2018, the commission said. During this time, the company reported total cost savings of $208 million. (See Kraft Heinz stock chart on TipRanks)

Last month, Piper Sandler analyst Michael Lavery maintained a Hold rating on the stock but lowered the price target to $39 from $41 (8.9% upside potential). The analyst said, “The company’s divestitures are likely margin accretive and add margin tailwinds in 2022.”

Overall, the stock has a Hold consensus rating based on 1 Buy, 5 Holds and 1 Sell. The average Kraft Heinz price target of $39.14 implies 9.2% upside potential. The company’s shares have gained 12.8% over the past year.

According to TipRanks’ Smart Score rating system, Kraft Heinz scores a 7 out of 10, suggesting that the stock is likely to perform in line with market averages.

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