Heinz 2Q net income rises on overseas growth
ASSOCIATED PRESS Nov 19, 2010
Updated: December 9, 2010 1:20AM
NEW YORK - H.J. Heinz Co.'s second-quarter net income rose 9 percent, helped by growth in overseas markets such as Latin America, more demand for its ketchup and price increases.
The maker of Classico pasta sauce and Ore-Ida potatoes said Friday that net income rose to $251.4 million, or 78 cents per share. That's up from $231.4 million, or 73 cents per share, in the same period last year. That beat analyst expectations of 76 cents per share, according to a poll by Thomson Reuters.
Foreign currency exchange hurt net income by 3 cents per share. Higher selling prices and cost cuts helped offset rising prices for ingredients.
Revenue fell 1 percent to $2.61 billion, short of analyst predictions of $2.67 billion.
The strongest sellers were Heinz ketchup, Complan nutritional drink in India, baby food in emerging markets like Latin America, and Ore-Ida potatoes in the U.S. Overall volume edged up 0.3 percent.
Revenue from emerging markets such as Latin America, China, Russia and India rose 10 percent, excluding the effect of currency translation. Demand for infant formula, ketchup and nutritional drinks drove the increase.
Emerging markets account for 15 percent of Heinz revenue and Heinz wants that to increase to 20 percent by 2013.
Food makers are increasingly focusing on expanding in emerging markets as they deal with slower growth in the U.S. and Europe, where longtime customers have been switching to less-expensive store brands amid economic worries.
Revenue rose 1 percent in North America and fell 5 percent in Europe. In Asia/Pacific, revenue rose 8 percent
The U.S. food-service business, which sells to restaurants and other commercial establishments, posted a 3 percent drop in revenue as its customers continued to contend with a market that has people eating out less to save money.
Heinz reiterated its full-year outlook of revenue growth of 3 percent to 4 percent, implying revenue between $10.8 billion and $10.9 billion.
It expects earnings per share to rise between 7 percent and 10 percent.