Heinz first-quarter sales dip, but expense cuts boost profits

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Sales dipped at the H.J. Heinz Co. during the first quarter, with the declines attributed to a range of issues from restructuring costs at the Pittsburgh food company to divestitures, currency translation rates and slower sales in categories like U.K. soup and U.S. frozen meals and snacks.

Overall profits rose to $195 million vs. $177.7 million in the comparable period a year ago, helped by lower expenses, the company said in a regulatory filing with the Securities and Exchange Commission. Net income from continuing operations in the first quarter fell to $195 million from $213 million.

Total sales of $2.8 billion in the three months ended March 30 compared to $2.86 billion for the comparable period last year, the company said. Heinz changed to a calendar fiscal year in late 2013.

Some of the sales declines were offset by an acceleration of sales ahead of the April launch of the U.S. part of a multi-year global program meant to drive productivity improvements and harmonize processes across the company known as Project Keystone.

Heinz’s first quarter filing reflected the ongoing changes being made under the ownership of Berkshire Hathaway and 3G Capital, as the new management looks to cut costs and chase new opportunities.

As of March 30, the company reported it had cut about 3,500 corporate and field positions across the global operation, incurring charges of approximately $300 million related to severance costs. The company expects to save about $250 million annually as a result of those cuts, which do not include the planned closures of five factories in the U.S., Canada and Europe this year.

Since the ownership change, there have a number of management changes at the company and another was noted in the filing. The company said Hein Schumacher, zone president of Asia Pacific, plans to resign effective May 26. Mr. Schumacher had been president of Heinz China before becoming zone president last June.

In the first quarter, Heinz reported sales in its North America segment rose 0.5 percent to $1.17 billion, while sales in Europe were up 1.7 percent to $763 million.

The Asia/Pacific region saw sales fall 10 percent to $492 million, while the Latin America segment’s sales fell 5.8 percent to $198 million. Another division that includes Russia, India, the Middle East and Africa increased sales 4.2 percent to $177 million.

“We are pleased with the company’s performance in the first quarter and the growth momentum at Heinz as consumers across the globe continue to embrace our brands and value our unrivaled product quality,” said Michael Mullen, senior vice president of corporate and government affairs.

“The company remains committed to driving best-in-class efficiencies that will strengthen our business, while continuing to reinvest in our brands and always putting the consumer first.”

Teresa F. Lindeman: tlindeman@post-gazette.com or at 412-263-2018.

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