Heinz profit beats forecasts on emerging markets growth

 
City A.M. Reporter
Baked beans maker H.J. Heinz has reported quarterly profit that beat analysts' expectations, boosted by growth in emerging markets.

The company's growth in emerging markets, helped by recent acquisitions in China and Brazil, has helped it offset sluggish growth in developed markets such as the US.

Heinz had 23 per cent of its sales in emerging markets in the quarter.

Heinz shares fell one per cent in premarket trading.

Excluding acquisitions, divestitures and the effect of foreign currency fluctuation, sales rose 13 per cent in emerging markets, but were flat in North America where price increases due to rising commodity costs caused less demand.

Heinz, which all sells its namesake ketchup, said net income was $235m in its first quarter that ended July 27, compared with $248.6m a year earlier.

Excluding the costs for closing factories and other one-time items, earnings were 78 cents a share. Analysts on average forecast 76 cents a share.

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.

Like most food companies, Heinz is trying to cut expenses as it faces higher costs for raw materials such as resins, sweeteners and oils.

Yet it 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, fuelled by price increases and a weaker dollar. Analysts on average forecast $2.79bn.