Heinz beats profit forecast on growth in emerging markets but shares slide

HEINZ yesterday reported quarterly profit that beat analysts expectations, with a boost from by growth in emerging markets.

However, the group’s shares fell as much as three per cent as a gloomy outlook on costs unnerved investors.

The company has made recent acquisitions in China and Brazil, which has helped to offset sluggish growth in developed markets, including the US.

The company, whose products include baked beans and ketchup, had 23 per cent of its sales in emerging markets in the quarter.

Excluding acquisitions, divestitures and the effect of foreign currency fluctuation, sales rose 13 per cent in emerging markets.

However, they were flat in North America where price increases due to rising commodity costs caused less demand – a pressure the firm said was likely to continue.

Heinz said in May that it planned to close five factories, cutting 800 to 1,000 jobs, and set up a European supply chain hub in the Netherlands.

Yet the company is less exposed to recent commodity market spikes than some rivals, since some of its biggest food purchases – tomatoes and potatoes -- have been less volatile.

Revenue rose 15 per cent to $2.85bn (£1.7bn) fuelled by price increases and a weaker dollar. Analysts had forecast $2.79bn.