Growth strategy pays off for Heinz

By Neil Merrett

- Last updated on GMT

Related tags: Cent, Heinz, Ketchup, Generally accepted accounting principles

Heinz yesterday posted 4.1 per cent growth in sales for
its 2007 fiscal year results as it benefited from improving
fortunes within Europe and its regional operations in markets
like Asia and Latin America.

The company was encouraged by the performance, which it attributed to a 1.7 per cent drop in expenses to $1.94bn, and a greater consumer focus, all despite the fiscal year being a week shorter than in 2006. This strong growth was reflected in operating margins, which were up about three percentage points to 16 per cent for the year, driven by the group's plans to offset commodity and marketing costs. Heinz's president William R. Johnson highlighted both increased pricing and innovation through its brands, especially in nutrition, as one of the key drivers of the performance. "Fiscal 2007 was a great year for Heinz as our business units successfully executed the first year of the FY07/08SuperiorValue and Growth Plan, meeting or exceeding our key financial targets,"​ he stated. "We greatly enhanced our focus on the consumer with a stronger spotlight on health and wellness, increased investment in marketing for future growth, greater R&D, and impressive productivity measures." ​ Regionally, Asia led growth with operating income up 20.8 per cent to $135m aided by the performances of key markets like China, Australia and New Zealand benefiting from a raft of product launches and marketing initiatives. Though commodity costs in markets like Indonesia were also up, Heinz offset the charges with a 2.1 per cent hike in its pricing structure. The rest of the world segment drove up operating income by 17.8 per cent to about $53m. Pricing was attributed to driving sales in key markets like infant nutrition in Latin America. In the US food segment, operating income grew steadily with a 1.9 per cent increase. This was largely attributed to a rise in sales of the group's flagship ketchup brand. Pricing again also played its part, with a sales increase of 1.7 per cent helped by condiments and frozen desert products. Overall volumes were down though, due in part to the company's decision to divest some of its operations in the area. Europe also proved encouraging for Heinz with income reaching $566m. Changes in pricing and improved volumes, through key brands like weight watchers and Heinz baked beans, were offset by difficulties in Russia for its non-Heinz products and unbranded frozen foods. By maintaining the key initiatives of the year of pushing both innovation and the number of its brands globally, Heinz believes that it can continue the strong performance into the 2008 fiscal year. "Heinz is confident in its plans for sustaining momentum in Fiscal 2008 with a global pipeline of more than 200 consumer-validated new products designed to meet consumer demands for convenient healthy food,"​ added Johnson.

Related topics: Markets

Related news

Show more

Follow us

Products

View more

Webinars