Shares of Kraft Heinz Co. (KHC) plunged by more than 17% in after-hours trading Thursday after it said it got a subpoena in October from the U.S. Securities and Exchange Commission and reporting earnings that missed expectations and a reduced dividend.
Kraft Heinz had earlier closed down slightly -- by .17% -- to $48.18 on Thursday.
But in a filing posted later, the company -- known for its ketchup and other foods and condiments -- included in an earnings report that it had received a subpoena in October "associated with an investigation into" its accounting policies, procedures and internal controls related to its "procurement function."
This includes "agreements, side agreements, and changes or modifications to its agreements with its vendors," said Kraft.
"Following this initial SEC document request, the Company together with external counsel launched an investigation into the procurement area," said Kraft.
As a result of the probe's finding, the company had $25 million more in costs of products sold during the fourth quarter, said the company, "as an out of period correction."
Kraft is now implementing "certain improvements" to its internal controls and has take other "remedial measures," it said.
"We continue to cooperate fully with the SEC and at this time the Company does not expect matters subject to the investigation to be material. For context, this $25 million increase to costs of products sold compares an annual procurement spend of over $11 billion annually for the total company," Kraft Heinz spokesman Michael Mullen told TheStreet in an email.
Kraft Heinz also had posted adjusted earnings per share of 84 cents for the fourth quarter of 2018, down six cents from the same time last year, missing expectations.
Kraft Heinz Chief Executive Bernardo Hees in a statement that "profitability fell short of our expectations due to a combination of unanticipated cost inflation and lower-than-planned savings. Going forward, our global focus will remain on leveraging our in-house capabilities, developing our talented people, and delivering top-tier growth at industry-leading margins."
In addition, the company's board of directors announced a reduced regular quarterly dividend of 40 cents per share of common stock. That's about a 22 cent cut from Kraft's previous quarterly dividend of 62.5 cents.
"We believe this action will help us accelerate our deleveraging plan, provide us strategic advantage through a stronger balance sheet, support commercial investments and set a payout level that can both grow over time and accommodate additional divestitures. By doing this we can improve our growth and returns over time," said Hees in a statement.
This story has been updated.