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Heinz anticipates strong third quarter results driven by innovation and marketing

BY DSN STAFF

PITTSBURGH H. J. Heinz Co. stated today that it expects to report continued strong sales and profit momentum when it releases third-quarter results Feb. 26. Preliminary results include sales growth of approximately 14 percent and operating income growth of approximately 8 percent. The company is optimistic that it will achieve full-year EPS growth of 9 percent to 10 percent compared with last year.

Heinz expects third-quarter organic sales growth (volume plus price) of between 8 percent and 9 percent, driven by a volume increase of roughly 5 percent, and net pricing of more than 3 percent. The very strong organic results were led by the strength of the Heinz brand, with organic sales up more than 9 percent. The anticipated organic sales figures in the third quarter represent the continuation of the Company’s strong organic sales growth over the past two years. For the quarter, foreign exchange is expected to contribute roughly 5 percent of growth.

Heinz operating income is expected to increase 8 percent for the quarter, driven by continuing momentum in North American Consumer Products, Europe, Asia/Pacific and the rest of the world, partially offset by the U.S. foodservice business. The company said it generates 60 percent of its sales outside the United States.

The company anticipates third-quarter EPS of $0.67 to $0.68, reflecting a higher tax rate in the quarter of 31.5 percent to 32.5 percent, compared with the previous year rate of 26 percent. These results put Heinz on track to achieve its full-year targets including its plans to continue investing in commercial innovation and capability-building initiatives. The company has narrowed its expected full-year EPS forecast to the top end of its previously announced range to $2.60 to $2.62, a 9 percent to 10 percent increase over last year.

The fiscal third quarter for Heinz ended on Jan. 30, 2008.

Heinz is a global family of leading branded products, including Heinz ketchup, sauces, soups, beans, pasta and infant foods (representing over one-third of Heinz’s total sales), Ore-Ida potato products, Weight Watchers Smart Ones entrees, Boston Market meals, T.G.I. Friday’s snacks, and Plasmon infant nutrition. Heinz is famous for its iconic brands on five continents, showcased by Heinz ketchup.

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Q2 sales up, profits down for Campbell’s

BY DSN STAFF

CAMDEN, N.J. The Campbell Soup Co. says its second-quarter profit slipped 3.9 percent even though its sales rose.

The world’s largest soup maker stated that it earned $274 million or 71 cents per share for the three months ended Jan. 27. That was down from $285 million, or 72 cents a share, a year ago. Its sales climbed 7.4 percent to $2.21 billion from $2.1 billion a year earlier.

The company attributed that sales growth to volume and mix, which added 4 percent, price and sales allowances, which added 1 percent, increased promotional spending, which subtracted 1 percent; and currency, which added 3 percent.

“Through the first half of the year we have delivered strong sales growth across many of our businesses. Despite the difficult operating environment, we also have delivered solid earnings performance from continuing operations, while maintaining marketing support for our key brands.,” said Douglas Conant, president and chief executive officer.

“In the quarter, our U.S. soup business rebounded from a slow start to the year, driven by the performance of ready-to-serve soups and broths. Across our soup portfolio, lower sodium soups continued to perform well. Our beverage business continued its outstanding performance, with double-digit sales growth. Pepperidge Farm delivered strong sales and earnings growth in spite of significant commodity cost increases.”

For all of fiscal 2008, Campbell’s still expects profits to be up 5 percent to 7 percent.

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Healthy foods and accessories feed pet industry

BY Doug Desjardins

SAN DIEGO The annual Global Pet Expo opened in San Diego Feb. 14 with thousands of new products debuting to feed the growing pet industry. Show sponsor the American Pet Product Manufacturer’s Association estimates pet product sales jumped 5 percent in 2007 to $40.8 billion and are expected to increase again in 2008.

On the floor of the San Diego Convention Center, more than 750 exhibitors—along with dozens of dogs, cats and the occasional eagle and owl—are showcasing new products with pet accessories and healthy foods two of the hottest categories.

Cott Beverages is making its first foray into the pet business with its FortiFido water for dogs. The water comes in four flavors with a unique blend of vitamins and supplements for dogs with different needs.

“We’re making our big national launch right now in pet specialty stores, grocers and mass merchants,” said Cott director of innovation Charles Calise.

Sales of healthy foods have thrived since the tainted food scare last fall that forced suppliers to recall hundreds of products made in China.

“We saw our sales rocket after that incident,” said Norman Levitz of Wagatha’s, a Vermont company that makes organic biscuits for dogs.

Pet clothing is another growing category. Jakks Pacific Pets unveiled its new line of Doggie Disguises to dress pets for Halloween. And Gramercy Distributors showcased its new Cool Vest, a light vest with a waterproof lining that keeps dogs cool in hot weather.

The Global Pet Expo—the largest gathering of pet suppliers and retailers in the U.S.—will end Feb. 16. The show is moving from San Diego to Orlando in 2009.

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