Heinz Raises Outlook as Q2 Sales Rise

Heinz has reported sales of $2.67bn for the second quarter of 2009, an increase of 2.5% compared to the previous year.

Acquisitions net of divestitures increased sales by 3.1%, driven by the December 2008 acquisition of Golden Circle in Australia, which has expanded Heinz’s Health & Wellness platform in beverages.

Operating income increased 6% to $408m, reflecting carryover pricing, improved productivity and disciplined cost management.

On a constant currency basis, operating income grew 10.2%. Gross margin increased to 35.8%, reflecting improved pricing and productivity, partially offset by higher commodity costs.

For the quarter, revenues of ketchup and sauces segment was $1.11m compared to $1.08m for the same period a year ago, revenues of meals and snack segment was $1.13m compared to $1.17m for the prior year, revenues of infant/nutrition segment was $291,574 compared to $267,962 for the previous year quarter.

During the second quarter of fiscal 2010, the company completed the sale of its Kabobs frozen hors d’oeuvres business within the US food service segment, resulting in a $15m pre-tax loss, which has been recorded in discontinued operations.

In the six months ended 28 October 2009, total company net income attributable to HJ Heinz Company was $444m, or $1.40 per diluted share, compared with $506m, or $1.58 per diluted share a year ago.

William Johnson chairman, president and CEO of Heinz, said the company delivered a strong financial performance in an adverse economic climate, led by our growing strength in emerging markets.

“Looking forward, the company is raising its full-year outlook for earnings and cash flow and we expect increased top-line momentum in the second half of the fiscal year,” he said.

“We expect solid volume growth in the second half, fuelled by significant increases in marketing, consumer-driven innovation and brand support initiatives that are underway to further leverage our strong brand equities, especially in developed markets.”

Heinz has raised full-year EPS outlook to a range of $2.72 – $2.82 from its original range of $2.6 – $2.7. The company has raised full-year operating free cash flow outlook to approximately $1bn.