Heinz Achieves Record Sales
During the year, Heinz increased its focus on fast-growing Health and Wellness products by adding functional benefits to many products and reducing salt, sugar and fat in others.
30/05/08 H. J. Heinz Company has reported strong earnings and sales growth for Fiscal 2008 as annual sales eclipsed $10 billion for the first time in the Company's history. Earnings per share rose 11% to $2.63 from $2.38 from continuing operations in the prior year and annual sales surged 12% to $10.1 billion driven by 14% growth in Heinz branded products, 26% growth in Weight Watchers and Weight Watchers Smart Ones brands, and 25% growth in emerging markets.
Operating income increased 8.5% to $1.57 billion as Heinz benefited from increased volume, improved pricing and productivity, and favorable currency exchange rates. Full-year net income from continuing operations increased 7% to $845 million.
"Heinz once again delivered exceptional financial results in FY08 as we significantly increased sales, profits and operating free cash flow while also increasing marketing by 15% and introducing more than 200 new products," said William R. Johnson, Chairman, President and Chief Executive Officer. "We achieved record sales growth of 12% to $10.1 billion, with sustained success in North American Consumer Products, increasingly strong performance in Europe and accelerating growth in emerging markets. Not only did we meet or exceed virtually all the goals we set for the past two years, but we have raised our outlook for sales and profits in our new High-Performance Plan for FY2009/2010."
During the year, Heinz increased its focus on fast-growing Health and Wellness products by adding functional benefits to many products and reducing salt, sugar and fat in others.
Fiscal 2008 sales increased by $1.1 billion, to $10.1 billion. Volume rose 3.6% as the Company increased its investments in marketing by 15% and in consumer-focused research and development by 17%. This focus on marketing, innovation and consumer value enabled the Company to realize price increases of 3.3% during the year. Coupled with productivity savings, the improved pricing helped Heinz partially offset the impact of commodity cost inflation, which is affecting all food manufacturers. Commodities increased over 8% in Fiscal 2008. Based on the Company's current projections and the global economic outlook, Heinz expects commodity inflation to continue at approximately the same rate for the next two years. Foreign exchange accounted for 5.1% of the sales growth in Fiscal 2008. Heinz's tax rate was higher than last year at 30.6%, versus 29.6% in Fiscal 2007.
Reflecting its new growth plan, Heinz announced today that it expects Fiscal 2009 earnings per share in the range of $2.83 to $2.91 (an increase of 8% to 11%).
Heinz expects to drive 6%+ annual organic sales growth through increased marketing and R&D investments. Over the course of the plan, the Company expects to launch more than 400 new products supported by an incremental marketing investment of approximately $60 to $100 million and is targeting 15% of its annual revenue from products launched in the prior 36 months.
Heinz is expecting accelerated growth in Health & Wellness which is growing two times faster than all packaged foods. Heinz has one of the most Health & Wellness oriented portfolios in the food industry with a wide range of tomato sauces, baked beans, soup, low-calorie meals and infant nutrition.
Heinz anticipates annual sales growth in the high teens in its fast-growing emerging markets, accelerating to approximately 20% of the Company's sales within five years.
Heinz plans to leverage its strong manufacturing, distribution and sales infrastructure to drive market penetration and brand awareness, with a focus on reaching the growing middle class in these markets. With experienced management teams in place and unique distribution capabilities in countries such as China and India, Heinz anticipates making additional investments in R&D, marketing and capacity expansion.
Heinz plans to leverage its global supply chain to identify more cost-saving opportunities and further optimize the Company's manufacturing and distribution infrastructure. Consequently, Heinz expects to exit an additional five to six factories over the next two years. Heinz expects $400 million in supply chain productivity over the next two years and an increase in ROIC of 20 basis points.
Heinz plans to launch hundreds of renewable energy and water conservation initiatives under its recently announced Sustainability Goal of reducing greenhouse gas emissions by 20% by 2015.
