US food manufacturer HJ Heinz has reported higher-than-expected quarterly profits thanks to sales growth in emerging markets and strong global demand for ketchup.
Net income for the three months to 27 October was up 9 percent from a year ago, at $251 million (£157 million).
Total revenues fell 1.2 percent to $2.61 billion, as the strong dollar depressed the value of foreign sales, but leaving aside the dollar factor, Heinz claimed overall “organic sales growth” of 0.9 percent.
Emerging markets delivered organic sales growth of 10.2 percent, driven by infant nutrition products, ketchup and nutritional beverages as well as increased pricing, primarily in Latin America. Emerging markets also generated 15 percent of the company’s total sales for the quarter.
Organic sales of ketchup grew 3.3 percent globally, with growth across Europe led by Russia, where Heinz is the number-one brand.
All of the company’s operating segments, with the exception of US Foodservice, delivered organic sales growth for the quarter. Reported sales grew in Asia Pacific and North American Consumer Products while reported sales were down in Europe and the Rest of World segments due to currency translation. Lower sales for US Foodservice reflects the continuing decline in restaurant dining in the current downturn.
“Our strategy to accelerate growth in emerging markets is producing excellent results, especially in Asia, where Heinz is well-positioned with strong brands in growing economies that possess expanding numbers of new middle-class consumers,” said William R. Johnson, chairman, president and CEO. “Emerging markets are driving our growth this year and are on track to generate at least 20 percent of the company’s total sales by 2013.
“Heinz is investing in these markets to drive growth, as evidenced by this month’s acquisition of Foodstar, a leading manufacturer of soy sauce in China, and we are actively exploring other promising emerging markets,” he continued.
Heinz reaffirmed its previously announced outlook for sales, operating income and EPS for fiscal 2011. For the full year, the company expects to deliver, on a constant currency basis, sales growth of 3 to 4 percent, operating income growth of 7 to 10 percent, and growth of 7 to 10 percent in earnings per share.
