Sales fall at Heinz as restructuring costs dig into profit

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The H.J. Heinz Co. saw sales fall 3.7 percent to $2.72 billion in the three months ended Oct. 27, according to a regulatory filing today.

Acquired in June by 3G Capital and Berkshire Hathaway, the Pittsburgh food company reported sales volume fell 1.5 percent as gains in emerging markets were more than offset by declines in developed markets such as the U.S. and Europe.

Hit with restructuring costs, profit from continuing operations attributable to Heinz was $38 million compared to $295 million the previous year.

After acquiring the company for more than $28 billion, new management at Heinz eliminated about 2,000 corporate and field positions globally as of Oct. 27. The restructuring and productivity initiatives, which included the announcement in November of plans to close three plants in North America, incurred pre-tax costs of $198.7 million during the most recent quarter, the company said.

Heinz said sales in its North American consumer product division dropped 5.9 percent, with volume down in Heinz gravy, Ore-Ida frozen potatoes and Smart Ones frozen entrees. In part, the drop followed changes in promotions.

In Europe, sales fell 3.2 percent, while sales fell 6.5 percent in the Asia/Pacific region. The U.S. food-service segment, which supplies restaurants and hospitals, fell 0.4 percent.

The Rest of World segment that includes emerging markets such as Brazil and Egypt saw sales rise 3.5 percent.

The company said some of the sales shifts came as it adjusted pricing and promotions. Foreign exchange rates also played a role.

Teresa F. Lindeman: or 412-263-2018.

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