By Heather Haddon 

Kraft Heinz Co. named a new chief executive, replacing Bernardo Hees with another veteran manager of companies controlled by 3G Capital LLC amid weak sales and a federal investigation into the food giant's procurement practices.

Miguel Patricio, the former chief marketing officer of brewer Anheuser-Busch InBev SA, will succeed Mr. Hees as chief executive on July 1, Kraft said Monday.

Kraft hadn't previously announced a planned executive change or a succession plan. Kraft has yet to enter into compensation agreements with Messrs. Hees or Patricio, the company said in a filing Monday.

Shares in Kraft rose 1% in morning trading on Monday. The company's shares were down around 43% over the past year through Friday as sales have stalled and the company has acknowledged its yearslong cost-cutting drive undermined the value of some of its best-known brands.

Mr. Patricio said the leadership change, after Mr. Hees led the company for six years, was a natural step in Kraft's evolution under 3G, a Brazilian investment firm. 3G helped create the firm through the 2015 merger of H.J. Heinz and Kraft Foods, joining forces with Warren Buffett's Berkshire Hathaway Inc. to form the fifth largest food-and-beverage company in the world.

"He was the first one to admit that he was finishing this cycle with the company and that the company would benefit from having a person with a different background to lead it in the future," Mr. Patricio, who is 52, said in an interview.

Mr. Hees, 49, said in a statement that it had been an honor to oversee Kraft Heinz. "I have confidence that Miguel and the team will take Kraft Heinz to new heights," he said.

A Kraft spokesman said that Mr. Hees decided to move back to 3G Capital to focus on other projects. The company will disclose compensation at the appropriate time, he said.

3G is a top-tier investor in both Kraft and Anheuser-Busch, where Mr. Patricio worked for two decades. The firm's aggressive cost-cutting strategy, known as zero-base budgeting, was emulated by many consumer goods companies seeking to boost profits before falling out of favor recently amid troubles at Kraft and other proponents of the strategy.

Kraft's spending cuts left its brands in a weaker position to compete on store shelves just as many consumers turned away from packaged goods such as its Velveeta, Cheez Whiz and Oscar Mayer brands. Sales fell, and Kraft cut prices and added salespeople to compete.

The Chicago-based company in February disclosed the investigation by federal security regulators into its business and wrote down the value of its Kraft and Oscar Mayer brands by some $15 billion.

Kraft is facing lawsuits in the wake of the write-downs, including class-action suits from employees and shareholders regarding losses related to the stock's drop.

The company missed a February deadline to file its annual report with securities regulators as it concludes an internal investigation into irregularities in its procurement department. Kraft entered into an agreement with its lenders to file its financial statements by May 14, it said in a filing last month.

Mr. Patricio said he plans to move Kraft in a new direction. Mr. Patricio has worked in the consumer-packaged goods industry for more than 30 years, including stints at Coca-Cola Co. and Johnson & Johnson.

Mr. Patricio declined to comment on the Securities and Exchange Commission investigation into accounting practices in Kraft's procurement division.

He also declined to discuss Kraft's plans to potentially divest weaker brands. He said he wanted to focus on improving the quality of the company's products first.

"Some are a little bit dusty and we have to rejuvenate them, Mr. Patricio said.

Write to Heather Haddon at heather.haddon@wsj.com

 

(END) Dow Jones Newswires

April 22, 2019 11:33 ET (15:33 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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