Heinz Profit Rises on Strong US Business

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Ketchup maker H.J. Heinz Co. (HNZ) on Thursday said quarterly profit rose on strength in its U.S. business and said it was reviewing its international portfolio as it moves to focus on its biggest brands overseas.

The company has just completed a three-year plan in which it sold off several U.S. business to focus on ketchup, condiments, sauces and food services.

"We are going to place our focus and resources on our big brands with No. 1 and No. 2 market positions and in four large, developing markets," William Johnson, chairman and chief executive, said in a news release, noting that the moves are designed to make Heinz a faster-growing company.

The four developing markets are Russia, India, Indonesia and China, a Heinz spokeswoman said.

Heinz, whose market valuation on a price-earnings basis lags that of many of its competitors, said it would sell its HAK line of prepared vegetables in Northern Europe and has begun a review of its seafood and frozen businesses in Europe and its Tegel poultry business in New Zealand.

Brands that will be part of the review also include Weight Watchers (search) from Heinz and Linda McCartney frozen foods (search).

The European seafood business has been hurt by higher tuna prices, while Heinz, like other packaged food companies, has also been pressured by the growth of deep discount retailers in Northern Europe.

Heinz has already relaunched its Plasmon baby food brand in Italy, with new packages and lower prices, in the face of competition in that market from Nestle and others.

Profit for the fiscal fourth-quarter ended April 27 rose to $206.5 million, or 58 cents a share, from $196.5 million, or 55 cents a share, a year earlier.

The latest quarter include an after-tax impairment charge of $18.0 million related to the anticipated disposition of the HAK product line early in fiscal 2006.

Excluding one-time items, earnings were 63 cents a share, a penny better than the average analyst estimate compiled by Reuters Estimate.

Sales rose 5 percent to $2.45 billion, including a volume increase of 1.5 percent. The weak dollar, which boosts the value of overseas sales when they are converted into dollars, accounted for about 3 percentage points of the increase.

Heinz said net pricing increased sales by 0.6 percent.

Heinz forecast fiscal year 2006 earnings of $2.35 to $2.45 a share on a 4 percent to 6 percent sales increases. A higher tax rate and increased interest costs are expected to partially offset higher operating results, the company said.

Analysts on average forecast $2.46, according to Reuters Estimates.

Heinz also said it has formed an office of the chairman at its headquarters in Pittsburgh to focus on growth and new products. The office consists of the four top global operations executives and three corporate executives.