Skip to comments.Heinz Profit Falls, Plans 2,700 Job Cuts
Posted on 06/01/2006 6:26:14 AM PDT by xrp
Ketchup Maker Heinz Sees 4Q Profit Fall, Plans 2,700 Job Cuts
PITTSBURGH (AP) -- Food producer H.J. Heinz Co. on Thursday said fiscal fourth-quarter profit dropped 19 percent, and said it plans to cut 2,700 jobs, or 8 percent of its work force, and exit 15 plants this year as part of a plan to cut costs and resume earnings growth.
Heinz is facing pressure from billionaire investor Nelson Peltz to improve shareholder return. Earlier in the month Peltz and his Trian Group outlined a plan, which was rejected by Heinz, to improve profit by cutting costs and reducing incentives to retailers.
The maker of ketchup, sauces, pasta and frozen foods said profit for the quarter ended May 3 declined to $167.9 million, or 50 cents per share, from $206.5 million, or 59 cents per share during the same period last year.
Results include charges totaling 5 cents per share relating to the sale of assets and a write-down of the company's operations in Zimbabwe, offset by a gain from the sale of its European Seafood and Tegel poultry business. Increased interest costs and a substantially higher quarterly tax rate compared to last year also hurt results, the company said
Revenue grew nearly 8 percent to $2.4 billion from $2.23 billion, helped by double-digit growth in brands including Smart Ones meals, Classico pasta sauce and Ore-Ida potatoes.
Analysts, on average, predicted a profit of 49 cents on revenue of $2.36 billion, according to a Thomson Financial poll.
Heinz also outlined a growth plan for 2007 and 2008. The plan includes reducing costs by $355 million, in part by cutting 2,700 jobs and exiting 15 plants in fiscal 2007. It did not identify the plants in a news release. Heinz also said it was considering exiting five additional plants in fiscal 2008.
Heinz's plan also includes cutting $145 million "in deals and allowances" to those who carry its products.
At the same time, the company said it is authorizing a $1 billion share repurchase program in fiscal 2007 and 2008, and would boost its dividend by 16.7 percent to $1.40 a share in fiscal 2007 from $1.20 a share last fiscal year.
For all of fiscal 2006, profit declined 14 percent, to $645.6 million, or $1.89 per share, from $752.7 million, or $2.13 per share last year. Revenue grew 7 percent to $8.64 billion, from $8.1 billion last year.
The company expects to earn $2.35 per share in 2007 and $2.54 per share in 2008. The company expects sales growth of 3 percent to 4 percent in 2007 and 4 percent or higher in 2008.
"My name is John Kerry, and I'm all for the little people."
"Psst... You can't call them little people anymore. They're economically challenged."
"Oh. Ahem, my fellow Americans - I'm all for the economically challenged."
Crowd says, "Huh? Is he talking to us?"
BTW..did you know that Lynn Swann is on Heinz' board?
Too much more of this kind of news and Theresa's really going to be hitting the raisins...
*****BTW..did you know that Lynn Swann is on Heinz' board?*****
Probably got the position by kicking butt with the Steelers back in the day...at Heinz Field.
no, did not know he was on the Heinz board....is just another reason for the Dem Union lemmings around here to go flocking to Rendell and Casey....as they all know, it's the gub-mint's job to keep them employed.
poor, poor tareza
"Results include charges totaling 5 cents per share relating to the sale of assets and a write-down of the company's operations in Zimbabwe"
I haven't bought a heinz product since this noxious fool started using their money for his ambitions.
Well, if they're behind the competition they'll just have to ketchup...(collective groan)
Pretty soon Kerry and Momma-T will have to sell the Scaramouche if this keeps up!
I know I have not bought any of their product since 2003. Besides wally world has good generics.
One of the things they never mention is that ketchup sales are down because salsa is now the number one condiment (thanks George Costanza). Speedy Gonzales is loving this!
As a stockholder, this is a good thing. Looks like the market thinks so as well...already up almost 3% and near the 52-week high.
Heinz resembles the baby tomatoe in the Pulp Fiction catchup joke.
They should sell off their frozen foods line. It's an oversaturated market already.
And if you want to prevent Teresa and John Kerry from having access to the Heinz fortune, you'd need a time machine.
See what Freeper Power can do? I'll bet a lot of us don't buy Heinz --- I don't.
In between popping gin-soaked raisins, she was heard to mutter something about profits being down due to "scumbags"...
Did you miss the part where revenues are up....you know, they sold more stuff...