Heinz Wattie's New Zealand hasn't made a profit since 2021, financial records have revealed. Photo / File
Wattie’s New Zealand business paid out more to its suppliers and employees than it received in customer payments in its last financial year, filings to the New Zealand Companies Office show.
The food brand, owned by international giant Kraft Heinz, has been in the spotlight this week after Hawke’s Bay peach growers were told their fruit was no longer needed.
Almost 20 orchards across the region, many that have only just recovered from Cyclone Gabrielle, received an end-of-contract letter from Wattie’s.
It came as a shock to Hastings’ peach grower Mike Donnelly, who had been supplying Wattie’s for about 20 years and was recently informed the arrangement was ending.
He said Wattie’s had been a good client over the years and the shift appeared to be the result of multiple factors, including customers preferring cheaper products – given the tough economic climate – such as imported canned fruit.
The company said it was buying fewer Hawke’s Bay peaches as demand for New Zealand-grown canned peaches was declining.
Financial records show H.J. Heinz Company (New Zealand) made losses over the past three years and took an impairment of more than $210 million in 2024.
It made a loss of $187.9m on the back of that impairment in the year to December 28, 2024, which compared with a $51.9m loss in 2023. In 2022, the loss was $54.1m.
Payments to suppliers and employees during the 2024 year totalled $747.9m, more than the $738.3m it received from customers.
The company was left with cash and cash equivalents of $5.54m.
Of the $210.57m impairment charge, $117.6m of it was recognised against intangibles, which includes goodwill, brands, trademarks and customer lists.
This can indicate the value of Wattie’s assets was not as much as previously thought.
A further impairment amount of $83.5m was recognised against property, plant and equipment, meaning the value of Wattie’s vehicles, real estate, equipment and machinery had to be devalued from prior estimates.
The remaining $9.38m was recognised against right-of-use assets.
Wattie’s explained in its financial statement that it experienced a significant decline in sales volume and budgeted gross margins, resulting from a shift in consumer sentiments from premium brands to other brands.
“These are mainly driven from the increasing cost of living pressures and challenging operational conditions.”
As part of its impairment testing the company also undertook a sensitivity analysis to determine the impact of any significant change to its key assumptions.
It said “a reasonably possible change in any key assumptions would further result in an impairment loss” of around $14.4m to $36.7m.
Asked to comment on the impairments and the business’ wider financial position, a spokeswoman for Wattie’s said: “We are unable to comment on our financial information.
“However, the reduced intake of peaches from local crops is related to the increased consumption by consumers of the cheaper imported products following the cyclone.”
In 2023, the business reported total revenue of $739.3m. Its payments to suppliers and employees were $821.4m, while it received $865m from customers. Its cash position was $4.9m.
Weighing on its $51.9m loss in 2023 was the company’s decision not to proceed with the implementation of an enterprise resource planning system (SAP).
Wattie’s was forced to write off $12.4m, representing the money spent on the system’s development and implementation.
The largest contributor to the 2022 loss was a goodwill impairment of $61.9m relating to the Heinz Wattie’s business, as its future earnings potential had weakened and its accounting value had to be reduced.
The last time the company made a profit was in its 2021 financial year when it made $27.7m.
Wages for the business have also risen over the past three years, up from $106.3m in 2021 to $126.5m in 2024.
It hasn’t paid a dividend to its parent company since the 2020 financial year when it paid $35m.
Wattie’s has a long association with New Zealand. It began in 1934 in Hastings with James Wattie and Harold Carr, who set up the business to handle excess fruit.
Its first product was jam. In 1980, the company merged with Goodman Fielder and then it was bought by American-based H.J. Heinz Company in 1992 for $565m.
Heinz merged with Kraft in July 2015, creating the world’s fifth-largest food and beverage company at the time.
The roughly US$45 billion deal was orchestrated by Warren Buffett’s Berkshire Hathaway and Brazilian private-equity firm 3G Capital.
The company reported net income of US$2.75b in FY2024 down 3.5% on the prior year.
Earlier this month it announced plans to split into two companies again.
The separation is expected to take place in the second half of 2026.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.