H. J. Heinz Company (NYSE:HNZ) today announced results for the first quarter ended August 1, 2001. Excluding special items, Heinz reported core earnings of 61 cents per diluted share in line with market expectations, compared with 69 cents in the year-earlier quarter.

Including special items, Heinz posted net income of $200.5 million or 57 cents per diluted share. In the year-earlier quarter, Heinz posted net income of $204.5 million, or 58 cents per diluted share, before cumulative effect of accounting change (see table).

Company Profile:

H J Heinz

First-quarter sales increased to $2.19 billion from $2.17 billion, or 0.6%, and excluding the impact of currency, sales rose 4.5%. During the quarter, Heinz benefited from strong growth in Heinz Frozen Food in the U.S., continued strength in global retail ketchup, and the positive impact of acquisitions. Heinz experienced continued weakness in dry and canned pet food.

Heinz Chairman, President and Chief Executive Officer William R. Johnson said: “New product successes, such as Heinz® EZ Squirt condiments, and StarKist® pouch tuna and strong sales for some of our big brands contributed to our first-quarter performance.”

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The company said it is on track to deliver earnings for the full year Fiscal 2002 in the range previously communicated in June, with a significant improvement in the second half of the year because of acquisitions, new product introductions, margin enhancement initiatives and pricing. The company anticipates a second quarter earnings improvement of 3-5 cents over the first quarter’s results.


  • In the United States, Heinz Frozen Food had an outstanding quarter with volume up 11.2% because of record sales by Smart Ones® entrees and the successful launch of Hot Bites® hand-held snacks. The market share for Smart Ones® is up nearly 3 points, with fiscal year-to-date consumption up 34%.
  • U.S. retail ketchup market share in the latest four-week period ended August 11 (AC Nielsen) climbed 1.6 points to 56.1%, with the growth fueled by increased marketing and the widely heralded launch of EZ Squirt® `Funky Purple.’ On the heels of a record year for Heinz® ketchup sales in Fiscal 2001, the brand continues to gain momentum, with fiscal year-to-date consumption up 12.6% compared to last year.
  • The acquisition of Classico®, the leading premium pasta sauce in the U.S., greatly expands the flavor and taste options Heinz offers consumers and is a perfect fit with its tomato-based expertise in ketchup and sauces.
  • Heinz Europe had a strong quarter. Sales rose 7.4% (13.7% in constant currency) primarily due to acquisitions.
  • Pet snacks were bolstered by the introduction of Pup-Peroni® NawSomes!(TM), an innovative dog snack. The brand’s latest four-week share reached 8.7% of the fast-growing soft and chewy market.
  • StarKist® tuna significantly improved its performance due to margin improvement and the successful launch of the StarKist® tuna-in-a-pouch varieties.
  • In Japan, Heinz’s recently announced alliance with one of Japan’s leading food companies, Kagome, offers new opportunities for growth in addition to supply chain synergies.

This news release contains forward-looking statements regarding the company’s future performance, including earnings per share estimates for this fiscal year. These forward-looking statements are based on management’s views and assumptions, and involve risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These include, but are not limited to, sales, earnings and volume growth, competitive conditions, production costs (including energy), currency valuations, pricing increases, global economic and industry conditions, tuna prices, achieving marketing, sales, cost savings and working capital and debt reduction programs, success of acquisitions, divestitures, new product innovations, and supply chain and overhead initiatives, and other factors described in “Cautionary Statement Relevant to Forward-Looking Information” in the company’s Form 10-K for the fiscal year ended May 2, 2001, as updated from time to time by the company in its subsequent filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

ABOUT HEINZ: With sales approaching US$10 billion, H. J. Heinz Company is one of the world’s leading marketers of branded foods to consumers everywhere, whether in supermarkets, restaurants or on the go. Its 50 companies operate in some 200 countries, with more than 20 power brands, including the Heinz® brand with nearly US$3 billion in annual sales. Among the company’s famous brands are Heinz®, StarKist®, Ore-Ida®, 9-Lives®, Wattie’s®, Plasmon®, Farley’s®, Smart Ones®, Bagel Bites®, John West®, Petit Navire®, Kibbles `n Bits®, Pounce®, Pup-Peroni®, Orlando®, ABC®, Olivine®, Jufran® and Pudliszki®. Heinz also uses the famous brands Weight Watchers®, Boston Market® and Linda McCartney® under license. Information on Heinz is available at http://www.heinz.com.

                 H. J. Heinz Company and Subsidiaries

Special Items – First Quarters of Fiscal Years 2002 and 2001

The following tables provide a comparison of the company’s reported
results and the results excluding special items for the first quarters
of Fiscal 2002 and Fiscal 2001.

(Dollars in millions
except per share amounts) First Quarter Ended August 1, 2001
Net Gross Operating Net Per
Sales Profit Income Income Share
——– ——– ——— ——– ——-

Reported results $2,185.5 $ 870.5 $ 384.2 $ 200.5 $ 0.57
implementation costs – 8.7 10.4 9.4 0.03
restructuring costs – – 5.7 3.6 0.01
——– ——– ——— ——– ——-
Results excluding
special items $2,185.5 $ 879.2 $ 400.3 $ 213.4 $ 0.61
======== ======== ========= ======== =======

First Quarter Ended August 2, 2000
Net Gross Operating Net Per
Sales Profit Income Income Share
——– ——– ——— ———- ———

Reported results(a) $2,171.5 $ 898.9 $ 388.5 $ 204.5(b) $ 0.58(b)
Operation Excel
implementation costs – 17.3 56.4 37.1 0.11
——– ——– ——— ———- ———
Results excluding
special items $2,171.5 $ 916.2 $ 444.9 $ 241.6 $ 0.69
======== ======== ========= ========== =========

(a) Amounts have been restated for the effect of the change in
accounting for revenue recognition
(b) Before cumulative effect of accounting change

(Note: Totals may not add due to rounding.)

H. J. Heinz Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)

First Quarter Ended
August 1, 2001 August 2, 2000
FY2002 FY2001
————— —————
Sales $ 2,185,479 $ 2,171,511
Cost of products sold 1,315,016 1,272,576
————— —————
Gross profit 870,463 898,935

Selling, general and
administrative expenses 486,309 510,394
————— —————
Operating income 384,154 388,541

Interest income 5,358 5,641
Interest expense 75,547 81,059
Other (expenses) income, net (1,758) 2,165
————— —————
Income before income taxes
and cumulative effect
of accounting change 312,207 315,288

Provision for income taxes 111,733 110,837

Income before cumulative effect
of accounting change 200,474 204,451

Cumulative effect of accounting change – (16,471)
————— —————
Net income $ 200,474 $ 187,980
=============== ===============

Net income per share before cumulative
effect of accounting change – diluted $ 0.57 $ 0.58
=============== ===============

Net income per share after cumulative
effect of accounting change – diluted $ 0.57 $ 0.54
=============== ===============

Average common shares
outstanding – diluted 352,380 351,128
=============== ===============

Net income per share before cumulative
effect of accounting change – basic $ 0.57 $ 0.59
=============== ===============

Net income per share after cumulative
effect of accounting change – basic $ 0.57 $ 0.54
=============== ===============

Average common shares
outstanding – basic 349,202 347,732
=============== ===============

Cash dividends per share $ 0.3925 $ 0.3675
=============== ===============

Note: Both Fiscal 2002 and Fiscal 2001 include restructuring related

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