PITTSBURGH (dpa-AFX) - Ketchup king H.J. Heinz Co. (HNZ) reported Friday a profit for the second quarter that declined from last year, hurt by charges related to productivity initiatives and lower margins.
However, adjusted earnings per share grew 3.8 percent year-over-year, boosted by strong performance in emerging markets and global ketchup sales, and topped analysts' expectations.
Quarterly revenues missed their estimates, but the company reaffirmed its earnings guidance for the full-year 2012.
'Led by our trio of growth engines - Emerging Markets, Global Ketchup and our Top 15 brands - reported sales grew more than 8 percent and Heinz delivered organic sales growth for the 26th consecutive quarter despite the challenging economic environment in Developed Markets, especially in Australia and U.S. Foodservice,' President and CEO William Johnson said in a statement.
The Pittsburgh, Pennsylvania-based maker of Heinz ketchup, Weight Watchers meals and Ore-Ida french fries reported net income of $237.01 million or $0.73 per share for the second quarter, lower than $251.44 million or $0.78 per share in the prior-year quarter.
Excluding special charges of $0.08 per share for productivity initiatives, adjusted net income for the latest quarter was $262.54 million or $0.81 per share. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.78 per share for the second quarter. Analysts' estimates typically exclude special items.
The company noted that higher sales, lower taxes and favorable foreign exchange rates had a $0.03 favorable impact on earnings per share.
Sales for the quarter grew 8.3 percent to $2.83 billion from $2.61 billion in the same quarter last year, but missed fourteen Wall Street analysts' consensus estimate of $2.91 billion.
The acquisitions of the Quero brand in Brazil and the Foodstar business in China increased total company sales by 5.0 percent as they continued to perform well.
Sales growth was helped by a dynamic growth in emerging markets, with sales surging 50.3 percent and higher global sales of ketchup and the company's top 15 brands that grew 12.3 percent.
Consolidated volumes declined 2.9 percent, while overall net pricing improved 4.4 percent, with organic sales growth at 1.5 percent from last year. Foreign exchange translation favorably impacted total sales by 2.4 percent, and acquisitions, net of divestitures, increased sales by 4.4 percent.
Product-wise, sales of ketchup grew 8.9 percent, and meals and snacks sales edged up from last year. Segment-wise, North American consumer products sales edged down 1.1 percent, while Heinz Europe sales grew 5.8 percent, and sales for Heinz Asia/Pacific increased 11.6 percent. Sales for U.S. Foodservice declined 2.8 percent from last year, while rest of world sales more than doubled.
Gross profit margin for the quarter contracted 270 basis points to 34.3 percent from last year.
Looking ahead to fiscal 2012, Heinz said it continues to remain on track to deliver constant currency adjusted earnings in a range of $3.24 to $3.32 per share, with constant currency sales growth of 7 to 8 percent. Street currently is looking for full-year 2012 earnings of $3.33 per share on annual sales of $11.80 billion.
HNZ closed Thursday's regular trading session at $52.82, up $0.10 on a volume of 2.58 million shares. In the past 52-week period, the stock has been trading in a range of $46.99 to $55.00.
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