PITTSBURGH, Sept. 6, 2000 /PRNewswire/ -- H.J. Heinz Company (NYSE: HNZ)
today reported solid first-quarter earnings, propelled by the strong sales
performances of its European, North American frozen, and U.S. foodservice
businesses. Heinz's diluted earnings per share (EPS) increased 11.5% to
$0.68, excluding special items and the impact of the Weight Watchers classroom
business, which was sold in the second quarter of Fiscal 2000. The gross
profit margin increased to a record 42.2% from 40.0%, due largely to favorable
sales mix and increased productivity.
"This was a great quarter for Heinz," said William R. Johnson, Heinz
President and Chief Executive Officer. "Our performance in this quarter puts
us on track for achievement of our goal of 10% EPS growth this year. The
record increase in the gross margin to 42.2% shows that our strategic
initiatives are working. This has been the most innovative period in Heinz's
recent history with the imminent launch of a host of new products such as
Heinz EZ Squirt ketchup, StarKist Tuna in a Pouch, Heinz Microwaveable Soup
Bowls in Europe, Smart Ones Bistro Bowls and new Boston Market HomeStyle Meals
and soups."
Excluding special items (which are described in the tables below) and the
impact of the Weight Watchers classroom business, diluted earnings per share
increased 11.5% and net income increased 6.2%. Excluding just the special
items, first quarter Fiscal 2001 diluted earnings per share increased 4.6% to
$0.68 per share from $0.65 for the same quarter last year. (Note: All
earnings per share amounts are presented on an after-tax diluted basis.) Net
income, excluding only the special items, increased to $237.7 million from
$236.9 million last year. Including the special items, first quarter diluted
earnings per share were $0.57 which were equal to last year, and net income
was $200.6 million, compared to $206.7 million last year.
Excluding the impact of the Weight Watchers classroom business, sales for
the first quarter increased 3.3%, or 6.3% on a constant currency basis. With
nearly half of Heinz sales outside the U.S., Heinz brands are now number-one
and number-two in more than 50 global markets. Total sales for the quarter
decreased 1.3% to $2.15 billion, as increased volume (2.0%) and acquisitions
(6.4%) were offset by the impact of divestitures (5.5%), unfavorable foreign
exchange translation rates (3.0%) and lower pricing (1.2%).
Operating income for the first quarter increased 8.0%, excluding special
items and the impact of the Weight Watchers classroom business. Excluding
just the special items for both periods, operating income increased 0.8%.
Including special items, first quarter operating income increased to $382.7
million from $381.0 million last year.
The effective tax rate for the first quarter of Fiscal 2001 and Fiscal
2000 was 35%, excluding the impact of special items.
FIRST QUARTER HIGHLIGHTS
Heinz businesses generally performed well during the first quarter, with
double-digit sales increases in Europe and strong performances by Boston
Market HomeStyle Meals, Bagel Bites, and U.S. foodservice.
Europe
Heinz Europe delivered sales growth of 15.9%, or 24.1% on a constant
currency basis. Acquisitions, net of divestitures, increased sales 20.6%, due
primarily to the acquisition of United Biscuit's European Frozen and Chilled
Division. Sales volume increased 5.4%, driven primarily by the strength of
seafood and convenience meals (soups, beans, pasta). Heinz Europe is
launching Heinz tomato soup, together with other soup flavors, in a
microwaveable packaging format. Unfavorable foreign exchange translation
rates reduced sales by 8.2% and lower pricing reduced sales by 1.9%.
Excluding special items, operating income increased 16.5%, or 25.1% on a
constant currency basis. Including special items, operating income increased
9.8%.
North American Grocery & Foodservice
Heinz's U.S. soups, ketchup and foodservice businesses had an excellent
first quarter, but overall sales for this segment declined 3.5% due primarily
to lower sales for StarKist tuna (reflecting tuna fish prices at a 34-year
low) and canned pet food.
Fundamentals in Heinz's U.S. retail ketchup business remain extremely
strong. Latest trends show ketchup consumption growing, and Heinz's most
recent market shares are at record levels for this period. Importantly,
consumption of non-promoted ketchup is growing at double-digit rates, behind
the new "trap cap" and a new pricing strategy.
Overall sales volume decreased 0.9%, reflecting reduced consumption of
StarKist tuna in the quarter. Divestitures, net of acquisitions, reduced
sales 0.5% and the impact of foreign exchange was negligible.
Operating income for the segment increased 4.4%, excluding special items.
Excluding StarKist Seafood, operating income increased by 8.8%. Including
special items, operating income increased 8.8%.
North American Frozen
First quarter sales increased 7.0%, driven by volume increases of 4.9%,
following the continued success of Boston Market HomeStyle Frozen Meals and
the continued momentum of Bagel Bites snacks. This increase was partially
offset by a sales decline in frozen potatoes, related to the transition to the
new Stand Up Resealable Packaging (SURP), which will be rolled out nationally
this month. Higher pricing increased sales 2.1%.
Excluding special items, operating income increased 0.3%, reflecting
increased marketing spending behind Boston Market products and the national
rollout of the SURP for Ore-Ida frozen potatoes. Including special items,
operating income increased 11.9%.
Asia/Pacific
Excluding special items, first quarter operating income increased 7.0%, or
15.3% on a constant currency basis. Including special items, operating income
increased 1.1%.
First quarter sales declined by 4.6%, primarily due to unfavorable
exchange rates and, to a lesser extent, a weak quarter in the New Zealand
Wattie's business. Acquisitions increased sales by 0.9% and sales volume
increased 0.6%. Sales were reduced by 5.3% due to foreign exchange and by
0.8% due to lower pricing. Heinz affiliates in Australia, China and Indonesia
continued to perform well as sales volumes and operating income were strong in
the quarter.
INNOVATIONS
This period has been the most innovative in Heinz's recent history.
-- Ketchup - Few new food products have been anticipated with such
excitement as Heinz EZ Squirt ketchup, which will hit the shelves in
October. Coming in both tomato red and a "Blastin' Green" kid's
condiment, this innovation will have a transformative effect on the
category and will be supported by national advertising. In the U.S.,
the company's foodservice division has introduced the "Forever Full"
plastic ketchup bottle.
-- Frozen Foods - Six new Boston Market HomeStyle Meals items are being
introduced (cornbread, pot roast, cinnamon apples, broccoli and
cheese, beef sirloin with noodles and Swedish meatballs), as are new
Boston Market branded soups and chilies in test markets. This month,
Ore-Ida's revolutionary SURP should be available in 100% of the U.S.
Smart Ones has rolled out a line of low-calorie rice and pasta-based
"bowls," with excellent response from the trade and consumers.
-- Tuna - StarKist will begin shipping nationally this month three new
varieties of tuna in a flexible foil pouch. This product has
achieved record results in test scores due to superior taste and
texture, and unique "no-drain" convenience.
-- "Fridge Door" Soups - Heinz "Fridge Door" soups -- in new resealable
pour-and-heat plastic bottles -- are being offered in the U.K., where
Heinz is the number-one soup company.
-- Microwaveable Soup Bowls - In the U.K., a line of four ready-to-eat
soup favorites (tomato, chicken, mushroom and vegetable) are being
sold in individual-serving bowls that can be microwaved in two
minutes.
-- Infant Foods - In the U.K., Heinz is launching a new "Simplifeed"
infant formula system under the Farley's brand which provides
exceptional accuracy in preparing formula.
First Quarter Special Items
The following tables provide a comparison of the company's reported
results and the results excluding special items for the first quarters of
Fiscal 2001 and Fiscal 2000.
All of the following items have been previously disclosed, except for
additional Operation Excel implementation costs, which occurred in the first
quarter of Fiscal 2001.
(Dollars in millions,
except per share amounts) First Quarter Ended August 2, 2000
-------------------------------------------
Operating Income Net Income Per Share
---------------- ----------- ----------
Reported results $382.7 $200.6 $0.57
Operation Excel
implementation costs 56.4 37.1 0.11
---------------- ----------- ----------
Results excluding
special items $439.0 $237.7 $0.68
================ =========== =========
First Quarter Ended July 28, 1999
-------------------------------------------
Operating Income Net Income Per Share
---------------- ----------- ----------
Reported results $381.0 $206.7 $0.57
Operation Excel
restructuring costs 9.9 5.6 0.02
Operation Excel
implementation costs 24.7 16.5 0.05
Ecuador expenses 20.0 20.0 0.05
Gain on U.K. building sale -- (11.8) (0.03)
---------------- ----------- ----------
Results excluding
special items $435.6 $236.9 $0.65
================ =========== =========
(Note: Totals may not add due to rounding.)
This news release contains forward-looking statements regarding the
company's future performance. These forward-looking statements are based on
management's views and assumptions, and involve risks, uncertainties and other
important factors that could cause actual results to differ materially from
those expressed or implied in the forward-looking statements. These include,
but are not limited to, sales, earnings and volume growth, competitive
conditions, production costs, currency valuations, global economic and
industry conditions, achieving cost savings programs, success of acquisitions
and new product and packaging innovations, including the innovations listed
above and other factors described in "Cautionary Statement Relevant to
Forward-Looking Information" in the company's Form 10-K for the fiscal year
ended May 3, 2000, as updated from time to time by the company in its
subsequent filings with the Securities and Exchange Commission.
ABOUT HEINZ: With sales over US$9 billion, H. J. Heinz Company is one of
the world's leading marketers of branded foods to supermarkets and away-from-
home eating establishments. Its 50 companies operate in some 200 countries,
offering more than 57 hundred varieties. Among the company's famous brands
are Heinz, StarKist, Ore-Ida, 9-Lives, Weight Watchers, Wattie's, Plasmon,
Farley's, Smart Ones, The Budget Gourmet, Linda McCartney, San Marco, Go
Ahead!, Bagel Bites, John West, Petit Navire, Boston Market, Skippy, Kibbles
'n Bits, Pounce, Wagwells, Orlando, ABC, Olivine and Pudliszki. Information
on Heinz is available at http://www.heinz.com.
H. J. Heinz Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)
First Quarter Ended
-------------------------------
August 2, 2000 July 28, 1999
FY 2001 FY 2000
---------- ----------
Sales $2,153,492 $2,181,007
Cost of products sold 1,261,338 1,324,257
---------- ----------
Gross profit 892,154 856,750
Selling, general and
administrative expenses 509,496 475,777
---------- ----------
Operating income 382,658 380,973
Interest income 5,641 5,285
Interest expense 81,059 62,592
Other income, net 2,165 4,373
---------- ----------
Income before income taxes 309,405 328,039
Provision for income taxes 108,778 121,371
---------- ----------
Net income $200,627 $206,668
========== ==========
Net income per share - diluted $0.57 $0.57
========== ==========
Average common shares
outstanding - diluted 351,128 364,176
========== ==========
Net income per share - basic $0.58 $0.58
========== ==========
Average common shares
outstanding - basic 347,732 358,685
========== ==========
Cash dividends per share $0.3675 $0.3425
========== ==========
Note: Both Fiscal 2001 and Fiscal 2000 include restructuring related
items and other non-recurring items.
H. J. Heinz Company and Subsidiaries
Segment Data
(In Thousands)
First Quarter Ended
------------------------------
August 2, 2000 July 28, 1999
FY 2001 FY 2000
Net external sales: ---------- ----------
North American Grocery & Foodservice $932,577 $966,123
North American Frozen 227,190 212,412
Europe 638,927 551,509
Asia/Pacific 272,573 285,829
Other Operating Entities 82,225 165,134
---------- ----------
Consolidated Totals $2,153,492 $2,181,007
========== ==========
Operating income (loss):
North American Grocery & Foodservice $203,276 $186,890
North American Frozen 37,348 33,385
Europe 117,905 107,341
Asia/Pacific 36,337 35,931
Other Operating Entities 11,064 36,939
Non-Operating (23,272) (19,513)
---------- ----------
Consolidated Totals $382,658 $380,973
========== ==========
Operating income (loss) excluding
special items:
North American Grocery & Foodservice $226,275 $216,792
North American Frozen 42,822 42,684
Europe 138,751 119,094
Asia/Pacific 42,401 39,624
Other Operating Entities 11,064 36,939
Non-Operating (22,297) (19,513)
---------- ----------
Consolidated Totals $439,016 $435,620
========== ==========
The company's revenues are generated via the sale of products in the
following categories:
First Quarter Ended
------------------------------
August 2, 2000 July 28, 1999
FY 2001 FY 2000
---------- ----------
Ketchup, Condiments and Sauces $592,915 $611,612
Frozen Foods 419,745 301,080
Tuna 257,809 271,618
Soups, Beans and Pasta Meals 243,460 233,767
Infant Foods 223,084 231,401
Pet Products 276,616 294,337
Other 139,863 237,192
---------- ----------
Total $2,153,492 $2,181,007
========== ==========
SOURCE H. J. Heinz Company
 back to top
Related links:
http://www.heinz.com
Company News On-Call:
http://www.prnewswire.com/comp/575757.html or fax,
800-758-5804, ext. 575757
CONTACT:
MEDIA: Ted Smyth, SVP-Corp. & Govt. Affairs,
412-456-5780; Debbie Foster, Director-Corp. Comm., 412-456-5778;
or Jack Kennedy, GM-Strategic Comm., 412-456-5923; INVESTORS:
Jack Runkel, VP-Investor Relations, 412-456-6034, all of Heinz
|
