Low-carb foods boost Heinz

Condiment company posts a profit of 57 cents a share in fiscal 3Q, up from 43 cents a year earlier.
February 24, 2004: 8:39 AM EST

CHICAGO (Reuters) - Ketchup maker H.J. Heinz Co. said Tuesday that its fiscal third-quarter earnings rose as it rolled out a host of new foods to reinvigorate sluggish areas such as frozen foods. The company also said it eliminated some unprofitable products.

New products introduced in the quarter, some of which capitalized on the popularity of low-carbohydrate diets, included Smart Ones Truth About Carbs frozen entrees, One-Carb Heinz ketchup, and Ore-Ida Extra Crispy Crinkle fries. Heinz said the sales of each topped its expectations.

The company's food service business, which serves restaurants and other institutional clients, had double-digit sales growth.

The Pittsburgh-based company said it earned $202.2 million, or 57 cents a share, in its fiscal third quarter ended Jan. 28, compared with $151.6 million, or 43 cents, in the year-ago period.

Revenue fell to $2.10 billion from $2.11 billion, as the benefit of the weak dollar in Europe and Asia, which boosts the value of overseas sales when they are converted into dollar, were offset by divestitures and price reductions on some foods.

Gross margins improved, as Heinz eliminated less-profitable versions of some foods and improved its sales mix.

Heinz said its North American business experienced some pressure in the quarter due to a grocery strike in Southern California and the low-carbohydrate dieting trend, which is hurting some categories.

The company's prior-year results include earnings from discontinued operations that were spun off in December 2002 to canned foods processor Del Monte Foods Co.. Earnings from continuing operations in last year's quarter were 54 cents a share, excluding some special items.

Analysts had expected Heinz to earn 57 cents a share in the most recent quarter, according to Reuters Research.

Last week, Heinz narrowed its outlook for 2004 earnings to a range of $2.19 to $2.21 a share from an earlier range of $2.15 to $2.25. The company said it is on track to achieve those results.


http://money.cnn.com/2004/02/24/new....reut/index.htm