Heinz Acquisitions, Innovations Pay Off

At the H.J. Heinz Company Annual Meeting of Shareholders this week, Chairman, President and CEO William R. Johnson reported that fiscal 2011 marked yet another great year for Heinz as its delivered record sales, net income and operating free cash flow while completing key acquisitions in Brazil and China to accelerate growth.
 

Meanwhile. the company completed two key acquisitions in fiscal 2011 to accelerate further growth: Foodstar, the producer of Master soy sauces and fermented bean curd in China; and Quero, a Brazilian brand of tomato-based sauces, ketchup, condiments and vegetables, with annual sales of approximately $325 million.
 

“Our recent acquisitions in Brazil and China are exceeding our expectations while providing exciting new platforms for future growth in a rapidly changing world,” Johnson told shareholders. “Quero is off to a strong start in Fiscal 2012 and we expect it to double our sales in Latin America this year as we invest behind the brand and expand to new categories and customers.”
 

He added that Foodstar is expected to boost the company’s total sales in China to around $350 million in Fiscal 2012. “But I see this as just the beginning,” he said.
 

Johnson also highlighted the global growth of ketchup: “Around the world, we see ketchup as one of the keys to growing our core portfolio. Our ketchup franchise continues to benefit from innovations like Heinz Dip & Squeeze, which we introduced last year after much anticipation. Sales of Dip & Squeeze to restaurants continue to expand but we are also very enthused about the retail launch of our new Dip & Squeeze ten-pack starting this month.”
 

During his address to shareholders, Johnson also reaffirmed the company’s previously announced Fiscal 2012 outlook, saying: “For the full year, Heinz expects constant currency earnings in the range of $3.24 to $3.32 per share, excluding special charges of approximately 35 cents per share for a series of one-time strategic productivity investments. These one-time initiatives are designed to help drive sustainable growth, offset rising commodity costs and improve the efficiency of our global supply chain.”
 

Charges for productivity initiatives include charges for workforce reductions, factory closures and other implementation costs taken in Fiscal 2012 to accelerate growth.
 

Heinz reported its Fiscal 2012 first-quarter results on August 23, 2011. Commenting on those results, Johnson said: “We believe that our first-quarter results put Heinz on track to achieve our financial targets for the full year, despite the deteriorating U.S. economic environment and the challenge posed by escalating commodity costs and weak consumer confidence.”
 

Johnson noted that Heinz in May increased its annualized common stock dividend for Fiscal 2012 by 12 cents to $1.92 per share. Commenting on the dividend, he said: “This increase of almost 7 percent reflects our strong performance and the Board’s confidence in our plan to deliver sustainable growth. Heinz has now increased the dividend by almost 80 percent since Fiscal 2004 and returned more than $3.5 billion to shareholders through dividend payments during this period.”

Johnson concluded his speech by thanking shareholders “for investing in Heinz, which is more focused than ever on strengthening our position as one of the best-performing companies in the packaged foods industry.”