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August 13, 2008

US: Heinz unveils two-year growth plan

Ketchup maker HJ Heinz has unveiled its new ‘High Performance Plan’ which aims to drive sales growth of 6% per annum during the next two years.

Ketchup maker HJ Heinz has unveiled its new ‘High Performance Plan’ which aims to drive sales growth of 6% per annum during the next two years.

Speaking at today’s (13 August) AGM, Heinz chairman, president and CEO William Johnson said that Heinz’ focus on health and wellness, its expansion in emerging markets, new product development and an increase in marketing spend of 8-12% would drive sales and profits gains over the next year.

“Heinz continues to offer consumers great tasting and convenient foods while also giving them the health benefits that they are increasingly seeking,” Johnson said.

While the company sees growth prospects in the health and wellness category, Johnson said emerging markets were Heinz’ “biggest opportunity”.

“The Health and Wellness opportunity is large, but perhaps our biggest growth opportunity is in emerging markets, where we are leveraging our first-mover advantage and go-to-market capabilities to drive accelerated growth,” he said.

Heinz sales in emerging markets grew by 25% during fiscal 2008 to account for 13% of total group sales.

The company said it anticipates emerging markets to contribute about one-third of total sales growth over the next two years. Sales in emerging markets are expected to account for 13% of total sales over the next to years and as much as 20% by 2013, Johnson revealed.

NPD will drive growth in established markets over the next two years, Johnson said.

“Not since the days Henry Heinz was introducing his first 57 varieties have we been driving such a strong innovation agenda for the Heinz brand globally. We had a busy year of product launches for the brand in fiscal 2008, with another on tap for fiscal 2009,” he commented.

Johnson also hinted that Heinz is on the look-out for acquisitions, stating that the company has the necessary funds should an attractive opportunity arise.

“With a healthy balance sheet and abundant opportunities to explore in both the developed and developing world, we are confident in our ability to execute value-added acquisitions,” he revealed.

The company said that the targetted 6% increase in sales would drive operating income growth of 6-7%, EPS growth of 8-11% and generate operating free cash flow of around US$850m per year.

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