Heinz Reiterates Fiscal 2010 Guidance
In Fiscal 2010, “we expect our proven plan to drive continued growth on a constant currency basis, although we anticipate that the stronger dollar and foreign currency volatility will likely impact our reported results given that 60% of our sales and profits are generated from operations outside the United States,” Mr. Johnson said.
13 Aug 2009 At the H.J. Heinz Company Annual Meeting of Shareholders, Chairman, President and Chief Executive Officer William R. Johnson said, “the Company delivered record sales and profit and a sizeable increase in the dividend for Fiscal 2009 despite a difficult global economic environment.”
In a speech to Heinz shareholders, Mr. Johnson reviewed the Company’s results for Fiscal 2009, which ended on April 29 of this year. The full-year results, which Heinz reported on May 28, 2009, included:
- Record sales of more than $10.1 billion;
- Record net income of $923 million, an increase of 9.2% from the prior year;
- Earnings per share of $2.90, an increase of 10.3%; and
- Operating Free Cash Flow of $880 million.
Reconciliation of non-GAAP amounts are set forth in the attached financial tables. Organic sales are defined as volume plus price or total sales growth excluding the impact of foreign exchange and acquisitions and divestitures. Operating Free Cash Flow is defined as cash from operations less capital expenditures net of proceeds from disposal of PP&E. Also, constant currency as used in this press release is defined as the reported amount adjusted for translation (the effect of changes in average foreign exchange rates between the current period and the corresponding prior year), the impact of the fluctuation in the British Pound versus the Euro and U.S. Dollar cross rates on transaction costs (impact of currency on particular transactions such as raw material sourcing), and the impact of foreign currency translation hedges.
“Fiscal 2009 continued our streak of superior results under our plan to drive growth and high performance,” Mr. Johnson said. “Over the last three years, our global sales have grown at a compound annual rate of more than 5% and earnings per share have increased from an organic base of $2.10 in Fiscal 2006 to $2.90, a compound annual growth rate of 11%.”
In Fiscal 2009, “Heinz delivered exceptionally strong Operating Free Cash Flow of $880 million, making it possible to raise your dividend for the sixth consecutive year at a time when many other public companies have suspended or reduced dividends to conserve cash in this tough economy,” Mr. Johnson said.
Noting that Heinz has increased its annualized dividend almost 56%, from $1.08 in Fiscal 2004 to $1.68 in Fiscal 2010, Mr. Johnson added: “As Heinz moves forward, I assure you that growing your dividend remains a top priority as we are committed to returning a high percentage of earnings to our shareholders.”
Mr. Johnson said the Company’s record results in Fiscal 2009 reflected:
- “The strength of our sharply focused core categories of Ketchup and Sauces; Meals and Snacks; and Infant/Nutrition; which together generated about 96% of the Company’s sales;
- Excellent results from our Top 15 brands, which generated almost 70% of our total sales, propelled by higher marketing investment and breakthrough innovation;
- Our solid performance in key Developed Markets, led by another record year in North American Consumer Products; and
- Our exceptional growth in Emerging Markets, where we are connecting with middle class consumers in some of the world’s most populous countries.”
“While Heinz performed well in Developed Markets, our Emerging Market businesses delivered even more impressive results with reported sales increasing almost nine percent, propelled by growth in India, Indonesia, Latin America and Poland, as well as higher baby food sales in China,” Mr. Johnson said in reviewing Fiscal 2009 results.
Reiterating the Company’s previous comments about Emerging Markets, Mr. Johnson added: “We expect Emerging Markets to contribute disproportionately to our long-term growth and anticipate that they could generate as much as 20% of our total sales by Fiscal 2013, compared with 14% in Fiscal 2009 and just 11% three years ago.”
“Our increased marketing and successful focus on quality and innovation have helped Heinz rise to the challenges posed by the global recession and the emerging trends of increased at-home dining, channel shifting and the growth of private label,” Mr. Johnson said.
He added: “While consumers around the world have changed their behavior in response to economic concerns, they remain loyal to Heinz brands because we deliver quality, nutrition, innovation, convenience and value. They trust our Company’s brands, as they have for 140 years.”
In Fiscal 2010, “we expect our proven plan to drive continued growth on a constant currency basis, although we anticipate that the stronger dollar and foreign currency volatility will likely impact our reported results given that 60% of our sales and profits are generated from operations outside the United States,” Mr. Johnson said.
As Heinz announced on May 28, 2009, Mr. Johnson said the Company is projecting constant currency:
- Sales growth of 4 to 6%;
- Growth in Operating Income of 6 to 8%; and
- Earnings per share growth of 5 to 8%.
“Heinz is also expecting another strong year of cash generation with Operating Free Cash Flow of $850 to $900 million in Fiscal 2010,” Mr. Johnson said.
