•  Profits drop on charges
  •  Gross margin down 140 bps
  •  Sales up 8.8%
Heinz profit down on charges, margin pressure

Heinz profit down on charges, margin pressure

US ketchup maker Heinz has booked a decline in full-year net income after charges related to the group's efficiency drive hit the bottom line.

Net income in the 12 months to 29 April fell to US$939m, down from $1bn in 2011. The company said profits were dented by charges of $224m linked to initiatives to improve global productivity.

However, gross profit grew 4.7%, excluding charges, to $4.14bn in the fiscal year. Pricing and productivity "more than offset" total inflation, Heinz said. However, the group's gross profit margin declined 140 basis points to 35.5%, reflecting cost inflation, an unfavourable sales mix and the impact of recent acquisitions.

Sales grew 8.8% to $11.6bn. Gains were driven by double-digit growth in emerging markets, which generated a "record" 21% of total sales. Heinz said it also witnesses "strong growth" in the company's top 15 brands and from its global ketchup business.

Looking to fiscal 2013, Heinz said it expects sales growth of "at least" 4% and EPS growth of 5-8%.

CEO William Johnson said the group expects to continue to book double-digit growth in emerging markets as well as benefiting from "strong investments in our brands and businesses", the prior year's productivity initiatives and "effective" cost management.

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