Shares in HJ Heinz fell today (23 August) after the US company reported a drop in first-quarter profits.
Heinz’s stock was down more than 3% after it reported a 6% decrease in net income to US$226.1m for the three months to 27 July. Diluted earnings per share were $0.70 compared to $0.75 a year earlier. The company’s operating income fell 8.9% to $370m.
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However, costs linked to Heinz’s restructuring programme, announced in May, hit profits. Excluding the charges from the supply chain and manufacturing revamp, net income increased to $255m, compared to $240.4m a year earlier, while earnings per share were $0.78. Operating income climbed 1.1% to $410m.
However, Heinz saw its sales rise 14.9% to $2.85bn, boosted by the acquisitions in the last year of Brazilian condiments maker Quero and Chinese soy sauce firm Foodstar. On an organic basis, sales were up 3.1%.
Chairman, president and CEO Bill Johnston said Heinz’s operations in emerging markets had managed to help the company as it navigated challenging conditions in Europe and North America.
“Emerging markets generated a record 23% of our sales in the first quarter, up from 18% a year ago. Our strategy to accelerate growth in emerging markets organically and through acquisitions in countries with fast-growing populations helped Heinz deliver strong top-line growth and solid operating results despite the economic downturn in developed markets,” Johnston said.
Nevertheless, Heinz saw sales increase by 17.5% in Europe. Sales were up 4.9% on an organic basis and volumes rose 2.2%. In North America, Heinz’s sales climbed 1.7%, although volumes fell 3.1%.
Shares in Heinz were down 3.46% at $50.24 at 11:02 ET.
Click here for the full statement from Heinz and click here for coverage of the company’s conference call with analysts.
