Heinz reports profit decline in fourth quarter
By Charles Sheehan Associated Press Writer
PITTSBURGH (AP) – Foodmaker H.J. Heinz Co. reported diminished fourth-quarter profits Thursday despite an overall increase in sales, largely due to costs from spinning off several underperforming divisions.
Heinz earned $102.6 million, or 29 cents per share, in the three months ended April 30 compared with $223.5 million, or 63 cents per share, in the same period last year.
Excluding nonrecurring items, Heinz earned $184.8 million, or 52 cents per share, just shy of Wall Street expectations. Analysts polled by Thomson First Call were looking for earnings of 53 cents per share for the fourth quarter.
The year-ago results included earnings of $43.6 million from its pet food, seafood, soups and other divisions that were spun off in December and then merged with a unit of Del Monte Foods Co.
The latest results reflected one-time costs of $82.2 million resulting from that deal.
Sales rose 6 percent to $2.19 billion from $2.07 billion a year earlier. Heinz benefited from higher pricing and a weak dollar, which makes U.S. products more affordable abroad.
In Europe, sales increased by more than 11 percent and in Asia, sales were up 17 percent. About 60 percent of all sales for Heinz are outside of the United States.
Heinz spent the fourth quarter repositioning itself to further increase international sales with a focus on core brands – a change that has already shown positive results early this fiscal year, said William Johnson, Heinz’s chairman, president and chief executive officer.
“Heinz has become a stronger global food company with the successful spin-off to Del Monte and ongoing initiatives designed to restore profitable growth,” Johnson said.
The launch of the company’s upside-down “Easy Squeeze” ketchup bottle in September was the most successful innovation for Heinz since the company introduced plastic ketchup bottles in 1983, Johnson said.
Heinz will introduce the same ketchup bottle in Europe next month, he said.
Domestic sales of Heinz’ frozen foods decreased, most notably on disappointing results from new product lines Ore-Ida Funky Fries and Hot Bites.
“It (the earnings report) wasn’t terrible but it wasn’t great,” said William Leach, an analyst with Banc of America Securities. “I don’t want to be overly critical, but it seems like it’s one thing after another, like they’re the Dutch boy with a finger in the dike. They got rid of their pet food and tuna and Asia shaped up, but then frozen foods go down.”
For the year, Heinz reported net income of $566.3 million, or $1.60 per share, compared with $833.9 million, or $2.36 per share, a year earlier. Revenue rose to $8.24 billion from $7.61 billion a year ago.
Heinz said it is targeting earnings for this fiscal year in the range of $2.15 to $2.25 a share on sales growth of 3 percent to 4 percent. Analysts have been expecting Heinz will earn $2.21 a share for fiscal 2004, according a survey by Thomson First Call.
In afternoon trading on the New York Stock Exchange, Heinz shares were down 78 cents, or 2.3 percent, to $33.62.
___
On the Net:
H.J. Heinz Co.: http://www.heinz.com
AP-ES-06-12-03 1511EDT