Pittsburgh, Feb. 15 - H. J. Heinz Company said today that it expects to report continued strong sales and profit momentum when it releases third-quarter results on February 26, 2008. Preliminary results include sales growth of approximately 14% and operating income growth of approximately 8%. This continued strong momentum gives Heinz confidence that it will achieve full-year EPS growth of 9% to 10% compared to last year.
Heinz expects third-quarter organic sales growth (volume plus price) of between 8% and 9%, driven by a volume increase of roughly 5%, and net pricing of more than 3%. The very strong organic results were led by the strength of the Heinz® brand, with organic sales up more than 9%. The anticipated organic sales figures in the third quarter represent the continuation of the Company’s strong organic sales growth over the past two years. For the quarter, foreign exchange is expected to contribute roughly 5% of growth.
The Company’s strong sales performance is broad-based, with each segment expecting to post positive organic sales growth. Heinz supported its strong brands and innovation initiatives with continued double-digit increases in both marketing and R&D investments.
Heinz operating income is expected to increase 8% for the quarter, driven by continuing momentum in North American Consumer Products, Europe, Asia/Pacific and the Rest of World, partially offset by the U.S. Foodservice business. Third quarter results are expected to include sustained high commodity cost inflation which Heinz is overcoming with higher net pricing, productivity gains, and favorable foreign exchange, reflecting Heinz’s diversified international scale, with 60% of sales generated outside of the U.S.
The Company anticipates third-quarter EPS of $0.67 to $0.68, reflecting a higher tax rate in the quarter of 31.5% to 32.5%, compared to the previous year rate of 26%. These results put Heinz on track to achieve its full-year targets including its plans to continue investing in commercial innovation and capability-building initiatives. The Company has narrowed its expected full-year EPS forecast to the top end of its previously announced range to $2.60 to $2.62, a 9% to 10% increase over last year.
The fiscal third quarter for Heinz ended on January 30, 2008.
ABOUT HEINZ: H. J. Heinz Company, offering “Good Food Every Day”TM is one of the world’s leading marketers and producers of healthy and convenient foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz provides superior quality, taste and nutrition for all eating occasions whether in the home, restaurants, the office or “on-the-go.” Heinz is a global family of leading branded products, including Heinz® ketchup, sauces, soups, beans, pasta and infant foods (representing over one third of Heinz’s total sales), Ore-Ida® potato products, Weight Watchers® Smart Ones® entrees, Boston Market® meals, T.G.I. Friday’s® snacks, and Plasmon infant nutrition. Heinz is famous for its iconic brands on five continents, showcased by Heinz® ketchup, The World’s Favorite Ketchup®.