Heinz Profit Rises; Keeps Full-Year View

HJ Heinz posted a quarterly profit that topped expectations as higher prices and demand for its ketchup, soup and pasta sauces helped offset the impact of the stronger dollar.

A decision to hedge exposure to key currencies also helped, the company said Tuesday.

Heinz, whose products include Heinz ketchup, Ore-Ida frozen potatoes and Classico pasta sauce, is one of several packaged food makers that has benefited as consumers eat at home more often. Its portfolio of ketchup and sauces is also getting a boost as cash-strapped consumers try to dress up less-expensive items like pasta and hamburgers.

Still, Heinz's North American sales fell 6 percent as price increases failed to offset volume declines in some categories.

For example, intense promotional competition from Nestle's Lean Cuisine frozen-food brand cut into sales of Heinz's Smart Ones.

Heinz's earnings rose to $242.3 million, or 76 cents per share, in the third quarter ended on Jan. 28 from $218.5 million, or 68 cents a share, a year earlier.

AP

Excluding mark-to-market gains resulting from translation hedges on key currencies and from a total rate of return swap, Heinz earned 69 cents a share, beating the analysts' average forecast of 65 cents, according to Reuters Estimates.

The world's largest ketchup maker said revenue fell 7.5 percent to $2.41 billion, hurt by the stronger dollar. But free cash flow rose 25 percent to $233 million.

As it said last week, Heinz still expects earnings of $2.87 to $2.91 a share for the fiscal year, and organic sales to grow about 6 percent.

Also last week, CEO William Johnson told analysts that the company could not yet forecast 2010 earnings because consumer trends, commodity prices and foreign currency rates were too volatile.

Heinz shares rose to $33.50 in trading before the market opened from Monday's New York Stock Exchange close of $31.97.

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