Heinz Q1 Profit Declines

NEW YORK - Aug 20/09 - SNS -- H.J. Heinz Company reported net income of U.S. $212.6 million on revenue of $2,468 million during the first quarter ending July 29, compared to a net of $234.3 million on gross revenue of $2,5843 million during the same three month period last year.

Emerging Markets generated approximately 16% of the Company’s total sales, led by higher sales of Complan and Glucon-D nutritional beverages in India, and higher volume and pricing in infant/nutrition products and ketchup in both Latin America and Russia.

Heinz's Top 15 brands globally generated approximately 70% of reported sales, led by the Heinz brand, Ore-Ida potatoes and T.G.I. Friday’s snacks and skillet meals.

The company said carryover pricing and tight cost controls were key factors in driving higher constant currency profit. As anticipated, the costs for key commodities such as tomatoes, tin plate and potatoes rose during the quarter. Overall, the Company’s net input costs rose 6% in the first quarter of Fiscal 2010.

During the quarter, the Company spent $16 million in upfront costs for new productivity initiatives, while benefiting from a $20 million mark-to-market gain on its total rate of return swap, which largely offset higher interest costs. In August 2009, Heinz took steps to restructure and extend the maturity of certain debt obligations through a private placement offering and exchange of notes. Heinz had a tax rate of 28.5% in the first quarter, which ended July 29, 2009, reflecting benefits from tax planning.

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