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Heinz raises profit view on emerging markets Add to ...

H.J. Heinz Co. raised its 2011 outlook, helped by strong demand in emerging markets such as China and Indonesia and higher sales of its trademark ketchup in the United States.

The company, which also makes Ore-Ida French fries, expects fast-growing emerging markets to account for as much as 30 per cent of total sales in fiscal 2016, up from about 16 per cent in fiscal 2011, helped by acquisitions.

"I have never seen more M&A opportunities in emerging markets than I am seeing now," said chief executive officer William Johnson at the annual meeting of the Consumer Analyst Group of New York in Boca Raton. "In fact, the issue we're having is putting them in priority, making sure we're addressing the appropriate ones first."

"I think you'll hear us talk more about this in the coming months," Mr. Johnson added.

In November, Heinz acquired Foodstar, a Chinese maker of soy sauce.

Heinz said it expects full-year earnings to range from $3.04 (U.S.) to $3.10 per share, up from its prior range of $2.95 to $3.05 per share. Analysts on average had been expecting $3.09 a share, according to Thomson Reuters I/B/E/S.

Heinz sees organic sales growth, excluding any acquisitions, of about 2 per cent, driven by a 14 per cent jump in emerging markets, Mr. Johnson said Thursday.

"We expect an uneven global recovery, with slightly improved economic growth in the U.S. and Europe in 2011 and robust growth in emerging markets," Mr. Johnson said.

Heinz plans to report earnings for its fiscal third quarter on March 3. The company said it expects a profit of 84 cents per share, beating analyst estimates of 80 cents per share.

The better-than-expected results were fuelled by increased sales volume and an improved mix of products, higher margins and a lower tax rate, Mr. Johnson said.

Mr. Johnson also said its ketchup returned to growth in the United States, where consumers are increasingly becoming "bifurcated." He said "upstreamers," or consumers with annual incomes above $70,000, have increased their spending on groceries by 4 per cent since the start of the recession, while "mainstreamers" have cut their spending by 2 per cent over the same period.

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