Kraft Heinz bets on split, but growth prospects cloudy

(Reuters) -Kraft Heinz will be divided into two listed companies, one of which focuses on grocery stores and the other on sauces and spreads, with a decrease in the integration of a decade of time as the food maker aims to revive growth after years of slow sales.

The 2015 merger was led by Perkshire Hathaway from Warren Buffett and the Brazilian private stock company 3G Capital. Hathaway has a 27.5 % stake and is the largest shareholder in the company, according to LSEG data.

Here are comments from the company’s executives, analysts, investors and industry leaders on the division:

Miguel Patricio, CEO of the Kraft Hinz Council

“The complexity of our current structure makes it difficult to allocate the capital effectively, and to determine the priorities of initiatives and the size of driving in our promising fields.

“By separating two companies, we can allocate the appropriate level of attention and resources to cancel the capabilities of each brand to pay better performance and create value for the long -term shareholders.”

Warren Buffett, Chairman of the Board of Directors, Berkshire Hathaway

With disappointment with the division, says Bavate CNBC. The merger did not turn into a great idea, but dismantling the company will not solve its problems.

“We will start doing everything we think is in the interest of Berkshire.”

Brian Molberry, a great wallet manager at Zacks Management Management

“In general, this division will address some long complaints about efficiency, allowing each company greater control over the largest cost engines. If it succeeds, reducing costs and raising new products can be strong growth engines for both companies.”

“The key on the growth of future profits of the arrow (EPS) and organic revenues will be.”

Ross template, AJ Bell investment Director

“Kraft Heinz asserted that it is the division of itself into two parts is the latest step in the somewhat besieged consumable food industry, to evoke growth and cancel the lock.”

“The goal is to compete more effectively at a time when the costs of inputs remain challenging, as the demand may go away from processed foods and consumers who suffer from hard pressure with spending are more carefully, either by reducing consumption or trading through brands.”

Michael Lafri, chief research analyst, Piper Sandler

“Kraft Heinz expects better opportunities for Global Trish Elevation Co (sauces and booms), including at FoodService, but we see challenges on North American Grocery in FoodService, unless Kraft Heinz largely brings these brands.”

Scott Marx, stock analyst, Jeffrez

“For groceries in North America, since profitability is decreased, brands face long -term weaker consumption trends, questions about how to sustain / recover profit remains clear, while the division deals with the complexity of the portfolio of the portfolio and should allow more focused strategies, and questions about real growth and margin capabilities remain for new companies.”

(Participated in the reports of Savyata Mishra, Juveria Tabassum, Akash Srram in Bangaluru; Edit SRIAJ Kalluvila)