Posted on 02/28/2006 11:08:01 AM PST by new yorker 77
Ketchup maker H.J. Heinz Co. (NYSE:HNZ - news) on Tuesday posted a 23 percent drop in net profit, and fell short of Wall Street estimates, as its tax rate rose and the stronger dollar cut into the value of overseas sales.
Analysts said part of the earnings miss was because some operations that were reclassified by the company as discontinued had been classified as ongoing operations by analysts when they made their estimates.
"At least part of the apparent miss was due to the sale of businesses in Europe, as Heinz streamlines its operations there -- a plan that we like," Edgar Roesch, analyst at Bank of America Equity Research, said in a research note. He rates Heinz shares "buy."
The company is in the process of selling parts of its European business in order to improve profitability in that region. It saw sales volume declines in its Italian baby food business and frozen food business in Britain.
Heinz shares rose 5 cents to $37.65 in morning trade on the New York Stock Exchange, after falling as much as 2.6 percent earlier.
Net profit fell to $116.6 million, or 35 cents a share, for the fiscal third quarter ended January 25, from $152.4 million, or 43 cents a share, a year earlier.
Excluding one-time items, earnings from continuing operations were 50 cents a share, the company said. Analysts on average forecast earnings 56 cents a share, according to Reuters Estimates.
Sales rose 5.7 percent to $2.19 billion, driven mainly by acquisitions. Excluding the impact of foreign exchange rates, sales were up 9.4 percent. Analysts on average had forecast sales of $2.37 billion.
Based on volume, which factors out currency and price fluctuations, sales rose 2.9 percent, driven by the North American consumer products business and the Australian and UK businesses.
The company's European seafood business, which Heinz agreed last week to sell to Lehman Brothers Merchant Banking for 425 million euros, and the Tegel poultry business, which Heinz has also agreed to sell, were both included as discontinued operations.
The company said it is still looking to sell other businesses and is looking for ways to maximize shareholder value in its European frozen foods business.
Heinz's effective tax rate in the quarter rose to 35.5 percent, compared with 22.3 percent in the year-earlier quarter. Heinz said it continue to expect an effective tax rate for the fiscal year of 30 percent to 31 percent.
Heinz stood by its forecast for a 6 percent to 8 percent increase in fiscal 2007 earnings from pro forma 2006 earnings of $2.10 to $2.16, with sales up 3 percent to 4 percent.
Heading into Tuesday, Heinz shares traded at about 16 times estimated 2006 earnings, compared with a multiple of 17 for the Dow Jones U.S. Food Producers Index. (^DJUSFO - news).
The stock rallied 10 percent between February 6 and February 23, boosted by talk that billionaire investor Nelson Peltz could challenge the company's management in a proxy fight.
The deadline for filing a proxy motion is Saturday, Heinz Chairman and Chief Executive William Johnson said. He declined to say if he had spoken directly with Peltz.
"We're always prepared and willing, pleased to meet with shareholders." Johnson said in response to an analyst's question during a conference call.
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They can try to distance themselves from that squaw, but the kids are just as bad.
I am a Hunt's ketchup, et al, buyer now.
"net profit...fell short."
Catch up. Get it. Ketchup.
IBBF!
Here I thought it was because of te-RAY-za skerry.
Wish I could say the same. I've always liked and bought Heinz ketchup. It's the only brand that I buy. However, I do water it down to make it last longer so that I don't have to give the company more money.
Means the gigolo will be hunting for his next meal ticket.
Arafats wife is now single and loaded. They are perfect together.
We stopped buying Heinz.
Would've been funnier if it has fallen 57%
should read:
Would've been funnier if it had fallen 57%
We stopped buying Heinz.
So did we -- guess a lot more people did, too!
Unfortunately, this won't hurt Kerry or Terrayzza at all. They'll just fire some workers or sell off some of the business. Gotta keep those SUV's in gas.
NONE of my family will ever buy another heinz product EVER!
LLS
Porr Mrs. Kerry will have to use Beefeaters Gin rather than Tanquery or Bombay Saphire to soak her white raisins.
So your Heinz Ketchup tastes just like the Heinz in restaurants?
Isn't one of dizzy tizzy's son's running for elective office in Pennsylvania?
Seems to me their losses were mainly in the European sector, possibly due to many coalition member nations that didn't like Kerry's attacks on President Bush.
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