Heinz says second-quarter earnings rise slightly
PITTSBURGH (AP) – Food giant H.J. Heinz Co. said Thursday its second-quarter earnings rose 2 percent as it prepares to shed StarKist tuna, 9-Lives pet food and other brands. The ketchup and frozen foods maker earned $212 million, or 60 cents a share, in the three months ending Oct. 30 compared with $208 million, or 59 cents a share, in the same period a year ago.
Excluding one-time costs, Heinz earned $219 million, or 62 cents per share, in the latest quarter. That was better than projections from analysts surveyed by Thomson First Call, whose median estimate was 58 cents per share.
Revenue rose 6.4 percent to $2.6 billion from $2.4 billion a year ago. Sales volume fell for the second straight quarter, down 1.7 percent.
Heinz is in the middle of a strategy to shift from promotions to consumer advertising in an attempt to build loyalty in its ketchup and frozen food brands. In June, Heinz announced it would sell its tuna, pet food and domestic baby food brands to Del Monte Foods Co., the country’s biggest canned fruit and vegetable company, as part of a $1.8 billion deal. The deal, which is expected to close by early 2003, allows the ketchup-maker to concentrate on its core products while increasing Del Monte’s presence on supermarket shelves.
Preparing for the loss of one-fifth of its annual revenue, Heinz increased advertising on its core brands 45 percent in the first quarter to try to bolster consumer loyalty.
Heinz’s ketchup, condiments and sauces sales rose 9.4 percent to $633.1 million from $693.1 million. Frozen food sales rose 5.4 percent to $524.6 million from $497.9 million last year.
Sales of tuna rose 7 percent, while pet food sales fell 8 percent.
In the first six months of the year, Heinz reported earnings of $312 million, or $1.10 per share, down from $408.7 million, or $1.16 a share, last year. Revenues rose to $4.8 billion from $4.5 billion a year ago.
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