(RTTNews) - Packaged foods company H. J. Heinz Co. (HNZ: News ) on Tuesday reported a 16% decline in profit for the second quarter as the year-ago quarter's results were boosted by a currency hedge gain.

The latest quarter's results also reflect a one-time loss on the sale of a small non-core business in the US Foodservice segment However, sales for the quarter increased 2.5% and topped analysts' consensus estimate. Looking ahead, the company raised its outlook for earnings from continuing operations for fiscal year 2010.

Like most packaged food companies, the economic downturn has benefited Heinz as consumers started eating at home more often than going to restaurants to save money. However, the company's profitability is challenged by fluctuating price of ingredients as well as a stronger dollar as it does much of its business overseas.

Second-Quarter Results

Pittsburgh, Pennsylvania-based Heinz reported net income of $231.44 million or $0.73 per share for the second quarter, lower than $276.71 million or $0.87 per share in the prior-year quarter. On average, thirteen analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the second quarter. Analysts' estimates typically exclude special items.

According to the maker of Heinz ketchup, Weight Watchers meals and Ore-Ida french fries, the latest quarter's results reflect 11.7% organic sales growth in emerging markets, higher sales of its Top 15 brands and carryover pricing from the prior year.
The latest quarter's results include a one-time loss of $10.9 million after-tax on sale of the company's Kabobs frozen hors d'oeuvres business within the U.S. Foodservice segment, which was recorded in discontinued operations. Heinz noted that the sale of the business is not expected to have a material impact on the company's future profitability.

Net income from continuing operations attributable to common shareholders for the second quarter was $0.76 per share, down from $0.86 per share in the year-ago quarter. The decline in earnings was due to a currency hedge gain of $0.18 per share in the prior-year quarter.

Sales for the second quarter increased 2.5% to $2.67 billion from $2.61 billion in the same quarter last year, and topped analysts' consensus revenue estimate of $2.63 billion.

The increase in sales was led by double-digit organic growth in emerging markets and acquisitions, despite a 1% unfavorable impact of foreign currency. The 11.7% increase in organic sales growth for the quarter was driven by the company's strong growth in emerging markets, led by pricing and higher sales of nutritional beverages in India, and ketchup and baby food in both Latin America and Russia.

To receive FREE breaking news email alerts for HJ Heinz Co. and others in your portfolio

 1   2   3   4   Next Page