Heinz Q3 net grows; looks to health and wellness for growth

by FoodBusinessNews.net Staff
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PITTSBURGH — Net income at H.J. Heinz Co. grew by 88% during the third quarter ended Jan. 31 due to higher sales, improved gross margins, increased operating income and a lower effective tax rate.

Net income for the third quarter totaled $219,038,000, equal to 67c per share on the common stock, which compared with $116,600,000 in the third quarter of 2006.

Net sales for the quarter rose 5%, totaling $2,295,192,000, which compared with $2,186,524,000 in the same quarter of 2006.

"We are pleased to report another excellent quarter at Heinz," said William R. Johnson, chairman, president and chief executive officer of Heinz. "Our increased strategic focus on health and wellness, increased marketing support for successful innovations, and accelerating growth in fast-growing emerging economies like China, Indonesia, Poland and India is driving continued performance improvements."

Operating income in the North American Consumer Products segment rose 5% to $161,862,000, while sales increased 8% to $714,536,000. Due to continued growth of Smart Ones meals, Boston Market entrees and desserts and Heinz ketchup, volume increased 5%.

In the U.S. Foodservice segment, operating income was $53,343,000, down 4% from $56,902,000 in the third quarter of fiscal 2006. Sales in the segment also finished lower, easing 4% to $386,013,000, while volume decreased 4%.

In the European market, operating income rose 22% to $151,904,000, while sales increased 5% to $812,996,000.

Operating income in Asia and the Pacific soared to $27,656,000 in the third quarter, which compared with a loss of $957,000 in the same period a year ago. Sales in Asia and the Pacific increased 7% and volume increased sales 3%, which reflects continued strong performance in Australia and the Long Fong frozen food business in China.

Operating income in the Rest of the World was $11,902,000, up 142% from the same period a year ago. Sales in the segment increased 11% to $105,884,000, while volume also increased 11%.

Heinz is planning to continue growth with expanded investment in the health and wellness market. At the Consumer Analyst Group of New York Conference held Feb. 20 in Scottsdale, Ariz., Dave Moran, president and chief executive officer of Heinz North America was asked to head up a global effort to increase health and wellness activities across the company’s top brands and work to see that product and marketing initiatives move the company forward, Mr. Johnson said.

Mr. Johnson also said the company plans to launch more than 200 new products in fiscal 2008 with a goal of meeting consumer desires for taste, health and convenience.

Looking forward, Heinz remains on track to meet its full-year e.p.s. projection of $2.35 to $2.39, an increase of 12% to 14% versus last year, Mr. Johnson said.

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