NEW YORK — The strength of Heinz’ brands, a focused global portfolio and a rapidly growing position in emerging markets are all factors leading to growth at the company, said Art Winkleblack, executive vice-president and chief financial officer.
Mr. Winkleblack presented at the Wachovia First Union Consumer Growth Conference on Oct. 14 and discussed the company’s ambitions to expand through acquisitions.
"The pool of potential acquisition targets is as deep as we’ve seen in recent history, and we continue to evaluate opportunities to grow our business with strategic acquisitions that add shareholder value," Mr. Winkleblack said.
Reviewing first-quarter financial results that included a 12% increase in net income, Mr. Winkleblack said much has changed since he presented the latest quarterly results, but the company is still reaffirming it is on track to achieve sales and e.p.s. targets for the year. He said the company expects to achieve 6% or more growth in organic sales for the year and is setting its earnings per share range of $2.87 and $2.91.
"After completion of fiscal 2008, we launched our new high-performance plan in May to build on the broad momentum we established across our enterprise," Mr. Winkleblack said. "The plan is centered on four key pillars — grow the core portfolio, accelerate growth in emerging markets, strengthen and leverage global scale and make talent an advantage."
He said the company has shown it knows how to quickly adapt to new circumstances and turn consumer insight into new products and is successful at strong productivity and cost controls.
"To continue driving profitable growth, our toolbox includes the following — pricing, which may over time shift to pack size changes and tiering; innovation to drive value along with taste, health and convenience; management of the mix toward more profitable customers and s.k.u.s (stock-keeping units); global sourcing and the use of more cost-effective ingredients and packaging; stringent cost-reduction initiatives; and growth through value-added acquisitions."
In the previous quarter growth was led by infant and nutrition areas in large part due to growth in the Latin American, Indian and Chinese markets.
"A key part of our growth story continues to be strong momentum we have in emerging markets," Mr. Winkleblack said. "In the first quarter we drove sales at an outstanding rate of 36%, largely on the strength of innovation in our local market execution.
"The emerging markets I think really separate us from many of our peers and competitors just because of the strength of the platform that we have. Some folks talk about jumping into emerging markets. We’re actually there. We’re there in a very profitable way. We’ve been growing double-digit for a long period of time."
He said new products are driving growth in Europe and accounted for 10% of Heinz European sales in 2008.
Heinz North America represents about 45% of total company sales and about half of profit. While the majority of the business is in consumer products there is also the U.S. Foodservice business, which Mr. Winkleblack said has been a "tough environment" during the last few years as industry trends have flattened and consumers have felt the effects of higher gas prices.