Organic write-down reduces Heinz's earnings
the third quarter, though a write-down of its investment in Hain
Celestial provoked a 25 percent drop in earnings.
The company announced a sales increase of 7.8 percent for the quarter, but largely due to the write-down profit fell to $152.4 million, or 43 cents a share, from $202 million, or 57 cents a share, a year earlier. Heinz said in December it would have to write down its 16-percent stake in organic food maker Hain, which it bought at an average of $30 a share.
The North American consumer products segment increased by 11 percent, pushed by sales of Ore-Ida brand products, Bagel Bites and TGI Friday's frozen snacks.
"Heinz's marketing programs for these brands have been very effective and consumers have responded positively to new recipes and packaging," said the company.
The increase in sales across the Atlantic was slighter at 6.9 percent and benefited from the weaker dollar.
The sales growth was praised by company CEO William Johnson, who said he was particularly pleased by state of play in the US and added that developing markets such as India, Poland, Russia and parts of Asia also performed well.
Despite the loss of earnings, Johnson said Heinz remained on track with for its full-year target range of $2.32-$2.42, though added he expected the final results to be "towards the lower end of the range". Analysts on average forecast $2.34 a share, according to Reuters Estimates.
A decline in gross profit margin was blamed on increased commodity and fuel costs, lower pricing and substantially higher supply chain costs in the European seafood business, which it said it was considering exiting.
In recent years, Heinz has refocused its business on ketchup, condiments, sauces, food service, meals and snacks and in 2002, the company sold its tuna, pet food and baby food divisions to Del Monte Foods. Shares of Heinz rose 1.5 percent early on the New York Stock Exchange.
