Heinz’
Q4 earnings are in line with expectations, but the company has warned on Q1 and
Q2. The US food manufacturer has endured a troubled year, so its announcement
of Q4 profits, excluding charges, of $186 million must come as a relief. With
its current focus on boosting revenues, rather than cutting costs, Heinz is endeavoring
to secure its position for the future. However, warnings for Q1 and Q2 suggest
that Heinz still has several issues to resolve.
Expectations that Heinz will be able to find a quick fix to its problems have
been tempered. The company has warned that it is likely to have disappointing
results in fiscal Q1 2002, missing expectations by 3-5 cents per share. However,
Heinz has managed to meet its revised estimates for Q4, ending in May for the
firm.
Go deeper with GlobalData
Profits have been affected by higher energy costs, currency fluctuations, high
tuna prices, increased manufacturing costs and inventory reductions. The warning
for Q1 is largely a consideration of continuing difficulties with the strength
of the dollar, energy costs and softness in the quick-serve segment of its US
foodservice business. Heinz is now expecting to earn 60-62 cents per share over
the quarter. Q2 is also likely to be hit, though not as severely, by a 2-3 cents
EPS reduction.
Ending May 2001, the company’s Q4 profits excluding charges, totaled $186 million,
or 53 cents per share, compared to $226 million, or 63 cents per share, in the
same quarter last year. The extent of the company’s problems is clear. Including
a restructuring charge of $199 million, Heinz took a net loss of $175 million
for the year, down from a $97 million profit a year ago.
Heinz is reacting to difficult trading conditions with prudence by focusing
on revenues through extensive marketing efforts and new innovation. However,
the company will find it difficult to generate the kind of growth enjoyed by
its leading ketchup product across its other categories and major restructuring
could become an increasingly attractive option should the company’s fortune
not be reversed.
(c) 2001 Datamonitor. All rights reserved. Republication or redistribution,
including by framing or similar means, is expressly prohibited without prior
written consent. Datamonitor shall not be liable for errors or delays in the
content, or for any actions taken in reliance thereon.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
