Earnings: Heinz |
PITTSBURGH - (AP) - Food producer H.J. Heinz Co. (HNZ) on Thursday said fiscal fourth-quarter profit dropped 19 percent, and said it plans to cut 2,700 jobs, or 8 percent of its work force, and exit 15 plants this year as part of a plan to cut costs and resume earnings growth. Its shares rose nearly 4 percent to a new 52-week high in morning trading.
Heinz is facing pressure from billionaire investor Nelson Peltz to improve shareholder return. Earlier in the month Peltz and his Trian Group outlined a plan, which was rejected by Heinz, to improve profit by cutting costs and reducing incentives to retailers.
The maker of ketchup, sauces, pasta and frozen foods said profit for the quarter ended May 3 declined to $167.9 million, or 50 cents per share, from $206.5 million, or 59 cents per share during the same period last year.
Results include charges totaling 5 cents per share relating to the sale of assets and a write-down of the company's operations in Zimbabwe, offset by a gain from the sale of its European Seafood and Tegel poultry business. Increased interest costs and a substantially higher quarterly tax rate compared to last year also hurt results, the company said
Analysts, on average, predicted a profit of 49 cents on revenue of $2.36 billion, according to a Thomson Financial poll.
Heinz also outlined a growth plan for 2007 and 2008. The plan includes reducing costs by $355 million, in part by cutting 2,700 jobs and exiting 15 plants in fiscal 2007. It did not identify the plants in a news release. Heinz also said it was considering exiting five additional plants in fiscal 2008.
Heinz's plan also includes cutting $145 million "in deals and allowances" to those who carry its products.
At the same time, the company said it is authorizing a $1 billion share repurchase program in fiscal 2007 and 2008, and would boost its dividend by 16.7 percent to $1.40 a share in fiscal 2007 from $1.20 a share last fiscal year.
For all of fiscal 2006, profit declined 14 percent, to $645.6 million, or $1.89 per share, from $752.7 million, or $2.13 per share last year. Revenue grew 7 percent to $8.64 billion, from $8.1 billion last year.
The company expects to earn $2.35 per share in 2007 and $2.54 per share in 2008. The company expects sales growth of 3 percent to 4 percent in 2007 and 4 percent or higher in 2008.
Heinz shares rose $1.60, or 3.8 percent, to $43.95 in morning trading on the New York Stock Exchange, surpassing its previous 52-week high of $43.65.