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Heinz may give pet foods the boot
Friday, March 10, 2000 By Patricia Sabatini, Post-Gazette Staff Writer
H.J. Heinz Co. yesterday reported third-quarter profits that were in line with expectations, as Chief Executive Officer William Johnson gave his strongest indication yet that the company will sell all or part of its struggling pet food business.
"We're taking a very hard look at pet food," Johnson said in a meeting with food industry analysts in New York. He wouldn't elaborate.
Heinz's pet food unit, which includes such brands as 9-Lives cat food and Kibbles 'n Bits and Ken'L Ration dog food, has been losing market share for some time. Ralston Purina, maker of Puppy Chow and Cat Chow, has been mentioned as a likely buyer.
Heinz could try to sell the entire division, or hang onto the more lucrative pet treats business, which includes the Meaty Bone, Pup-peroni and Pounce labels.
The company doesn't make any pet products in the region, but it's in the process of moving the division's headquarters here from Newport, Ky., along with the StarKist tuna offices.
Johnson also said Heinz was making a major push to expand in the Asia/Pacific region, which "represents growth opportunities unlike any place in the world."
The region, home to half of the world's population, is an area of growing affluence and increasingly influenced by Western products, said David Williams, executive vice president in charge of the fast-growing region. The expansion strategy includes acquisitions and new products, he said.
In the United States, a number of product innovations are on tap. They include a resealable package for Heinz's Ore-Ida frozen potatoes, set to hit grocery shelves this spring; a new cap for the company's flagship ketchup that gets rid of the watery stuff that oozes to the top of ketchup containers; and "an extremely exciting breakthrough" in StarKist tuna coming this summer.
"It's something we're absolutely ecstatic about," Johnson said, declining to say more.
Heinz, which is in the midst of a restructuring, reported per-share operating profits rose 5 percent for the three months ended Jan. 26, to 63 cents from 60 cents a year earlier. That beat the estimate on Wall Street by a penny.
Including restructuring charges in both years, net income surged 42 percent, to $171.1 million, or 47 cents a share, from $120.6 million, or 33 cents.
Sales for the quarter edged up less than 1 percent to $2.29 billion from $2.28 billion the previous year.
Johnson said Heinz was on track to meet its goal of growing earnings per share by 6 to 7 percent for the full year, which ends in April.
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