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Strong Sales at Heinz Help Profit Climb 23%

September 01, 2006|From the Associated Press

PITTSBURGH — H.J. Heinz Co. said Thursday that its fiscal first-quarter profit jumped by 23%, thanks in part to strong sales growth, even as the ketchup and food maker awaited the outcome of a struggle with activist investors.

Profit grew to $194.1 million, or 58 cents a share, for the quarter ended Aug. 2, compared with $157.3 million, or 45 cents, a year earlier.

Revenue at the Pittsburgh-based company edged up 8% to $2.06 billion.

Analysts surveyed by Thomson Financial had expected a profit of 54 cents a share on revenue of $2.05 billion.

William R. Johnson, Heinz's chairman, president and chief executive, said the results reflected the company's aggressive plan to boost core brand sales and cut costs.

Activist investors seeking a voting bloc on the Heinz board and led by billionaire Nelson Peltz this year proposed similar measures for Heinz, which has been criticized in recent years for its weak stock performance.

Johnson said Heinz remained on track to deliver 10%-plus growth in earnings per share for fiscal 2007. He dismissed suggestions that the company's strong quarterly performance was a result of pressure from Peltz and his Trian Fund Management.

He told analysts the results reflected "a lot of hard work over a long period of time," referring to a four-year restructuring plan to encourage growth in three food categories: ketchup and sauces, meals and snacks, and infant nutrition.

The results followed a bitter proxy war with Trian that peaked at Heinz's annual shareholder meeting two weeks ago. Trian, Heinz's second-largest shareholder, nominated five candidates to Heinz's 12-member board in a bid to implement plans to cut costs and ramp up spending on the marketing of Heinz brands.

Heinz repeatedly rejected Trian's approach, saying it would cripple the company. The final shareholder vote tally is expected by mid-September.

Shares of Heinz fell 14 cents to $41.84.

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