Food products firm H.J. Heinz Co. (HNZ) reported Wednesday a higher profit in its first quarter, above market projections, mainly driven by strong results in emerging markets in Asia.
As stated at its shareholders meeting on Tuesday, the company reaffirmed its fiscal 2011 outlook.
For the first quarter, net income attributable to the company rose 13% to $240.43 million or $0.75 per share from $212.56 million or $0.67 per share last year. On a continuing operations basis, earnings per share grew 10.3% to $0.75 from $0.68 a year ago.
On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.
Sales grew 1.6% to $2.48 billion from $2.44 billion in the prior year. Ten analysts had consensus revenue estimate of $2.53 billion. The company attributed the strong results to accelerating double-digit sales growth in Emerging Markets and strong growth in North American Consumer Products.
In the quarter, organic sales, excluding the impact of foreign exchange and acquisitions and divestitures, increased 3.6%, reflecting the 21st consecutive quarter of organic sales growth. On a constant currency basis, sales grew 3.7%.
Volume grew 2.5%, and net pricing increased sales by 1.1%, while foreign exchange translation rates reduced reported sales by 2.1%.
Segment-wise, sales of the North American Consumer Products increased 4.8% from last year to $762 million on 5.3% rise in volume, while pricing decreased 2.7%.
In Heinz Asia/Pacific, sales climbed 19% to $558 million, with 6.9% rise in volume, favorable exchange translation rates that increased sales by 9.7%, and 2.4% increase in pricing, reflecting increases in Emerging Markets.
Meanwhile, Heinz Europe sales decreased 7.7% to $713 million mainly on unfavorable foreign exchange translation rates and net pricing decreased 0.4%, while volume edged up 0.2%.
Sales of the U.S. Foodservice dropped 2.3% to $329 million on 5.1% drop in volume, while pricing increased sales by 2.8%.
In the Rest of World, sales decreased 12.6% to $119 million, reflecting the unfavorable impact of foreign exchange translation rates which decreased sales 36.9%. Volume increased 3.8%, while pricing increased sales by 20.5%, largely due to price increases to offset inflation
Top 15 brands achieved 3.3% rise in sales on a reported basis, and 5.7% organic sales growth.
Gross profit increased 4.1% to $908 million and gross profit margin increased to 36.6% from 35.7% a year ago. Operating income grew 9.9% to $406 million.
Heinz Chairman, President and CEO William Johnson said, "I am pleased with our strong first-quarter results which were led by continued momentum in Emerging Markets and good results in North American Consumer Products. Globally, Heinz delivered strong organic sales growth in a difficult economic environment, including 8% growth in ketchup and almost 6% growth in our Top 15 brands."
In the preceding fourth quarter, net earnings attributable to H.J. Heinz were $192.37 million or $0.60 per share on sales of $2.72 billion.
Looking ahead to fiscal 2011, Heinz still expects, on a constant currency basis, earnings per share growth in the range of 7% to 10%, sales growth of 3% to 4%, and operating income growth of 7% to 10%. The company added that its full-year results will be impacted by foreign currency movements. Analysts expect the company to report earnings of $3.05 per share on revenues of $10.63 billion for fiscal 2011.
Heinz also expects to generate operating free cash flow of more than $1 billion for the second consecutive year.
Johnson added, "Heinz is off to a good start in Fiscal 2011 and we remain confident about the Company's business fundamentals, despite the difficult economic climate."
At the shareholders meeting in Pittsburgh on Tuesday, Johnson stated that emerging markets are on track to deliver at least 20% of the company's total sales by 2013, more than doubling their contribution of just five years ago.
HNZ closed Tuesday's regular trading session at $46.24, up $0.15, on a volume of 4.3 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.