Heinz yesterday (31 August) posted a 23% rise in first quarter profits partially driven by increased sales, proof, the company told just-food, that it is successfully driving growth in order to return value to shareholders.
Profits for the quarter climbed to US$194.1m, or $0.58 per share, compared with $157.3m, or $0.45 per share, reported for the same period of last year. Revenue increased by 8% from $1.9bn for Q12005 to $2.06bn for this quarter.
“Heinz’s impressive first-quarter performance demonstrates that the company is delivering results with a clear focus on growing its key brands and enhancing shareholder value,” director of global corporate affairs Michael Mullen told just-food.
The earnings report comes two-weeks after a proxy vote to determine whether activist investors, led by Nelson Peltz, will secure seats on the Heinz board. Peltz and his Trian Group hoped to secure five places on the company’s 12-member board, claiming that Heinz was failing to return value to shareholders and calling for increased marketing spend coupled with a radical restructuring and cost-cutting programme. The results of the vote are expected to be out in mid-September, with early indications suggesting that Trian has secured at least one board position.
Heinz’s chairman, president and chief executive officer, William R. Johnson, said that the company is on track to deliver earnings growth of 10% for the 2007 fiscal year. Dismissing claims that the strong performance was the consequence of pressure from Trian, Johnson said that the results reflected the four-year restructuring plan to encourage growth in three categories – ketchup and sauces, meals an snacks and infant nutrition.
The company said its improved sales were driven by double-digit growth in its ten core brands. Pricing improvements, favourable exchange rates and acquisitions – such as the purchase of HP Foods and Nancy’s – also boosted sales. Volume grew by 5.1%, driven by increased consumption and product innovation, Heinz said.
Heinz shares dipped slightly yesterday to close at $41.84 from an open of $42.65.