Heinz Enjoys Sales Increase for Fiscal 2009

The HJ Heinz Company has reported record sales and profit for fiscal 2009, with 10.3% growth in earnings per share and 9.2% growth in net income.

01/06/09 Organic sales increased 5.5% led by strong performances in emerging markets (a key growth driver) and North American consumer products. the company benefited from higher sales of Heinz Ketchup, Classico pasta sauces, Complan nutritional beverages and other leading brands, as the consumer trend of at-home eating accelerated in response to the global recession.

“Heinz delivered record sales and profit in fiscal 2009 despite the difficult global environment,” said William R Johnson, chairman, president and CEO. “Heinz brands around the world performed well, benefiting from the growing trend of at-home dining.”

Sales in emerging markets grew 8.8% on a reported basis and 15.7% on an organic basis, propelled by double-digit organic sales growth in India, Indonesia, Latin America, Poland and baby food in China. In Russia, the world’s second-largest ketchup market, Heinz has become the leader in the ketchup, condiments & sauces category. In India, sales of Complan have doubled over the past three years and are nearing $100m.

“Emerging markets are a key driver of long-term growth for Heinz, and they remain on target to generate 20% of our total sales by 2013,” said Johnson.

Fiscal 2009 full-year financial highlights

* Record sales exceeding $10.1bn
* Organic sales growth of 5.5%
* Organic sales of Top 15 brands grew 7.4%, with ketchup up 9.1% (reported sales grew 2.1% and 3.2%, respectively)
* Record net income of $923m (+9.2% vs fiscal 2008)
* EPS of $2.90, up 10.3%
* Operating free cash flow of $880m exceeded target
* After-tax ROIC increased 160bps to 18.4%.

Fiscal 2010 outlook

Heinz expects:

* On a constant currency basis, sales growth of 4-6%, operating income up 6-8% and EPS growth of 5-8%.
* Operating free cash flow of $850 to $900m.
* Increased investments in marketing and R&D (constant currency) to drive growth.
* Approximately $250m in productivity savings (2.5% of sales).
* Flat fixed costs on a constant currency basis in developed markets, excluding impact of acquisitions.
* Foreign currency translation and UK transaction rates to impact reported results.
* Based on recent average currency rates, reported EPS is expected to be in the range of $2.60 to $2.70 for the year.