U.S.A. stock market: Heinz sales rise on strong emerging market demand

H.J. Heinz Co., New York symbol HNZ, makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and infant food. Its flagship product is Heinz Ketchup. We analyze Heinz in Wall Street Stock Forecaster, our newsletter for U.S.A. stock market investing. In its latest fiscal year, which ended April 27, 2011, Heinz earned $989.5 million. That’s up 8.2% from $914.5 million in the prior year. Earnings per share rose 5.9%, to $3.06 from $2.89, on more shares outstanding. If you exclude costs to integrate a recent acquisition, Heinz would have earned $3.08 a share in fiscal 2011. That was just short of the consensus estimate of $3.09 a share. Sales rose 2.0%, to a record $10.7 billion from $10.5 billion. Most of the gains came from a 14.4% jump in sales in China and emerging markets, which together accounted for 16% of Heinz’s overall sales, up from 15% in the prior year. The company is seeing particularly strong demand for baby food in China, soy sauces in Indonesia and ketchup in Russia. As well, Heinz raised some of its prices to offset rising raw-material costs. That further added to the sales gain. The company plans to improve its long-term profitability with a new restructuring plan. Under this plan, the company will close five of its 81 factories and cut 3% of its workforce. Costs related to these moves will lower its earnings by $0.35 a share. Excluding these costs, Heinz expects to earn $3.24 to $3.32 a share in fiscal 2012. As well, Heinz raised its quarterly dividend by 6.7%, to $0.48 a share from $0.45. The new annual rate of $1.92 yields 3.6%. The company has raised its dividend four times in the past five years. Heinz is just one of the U.S.A. stock market picks we analyze in our Wall Street Stock Forecaster newsletter. You can get the latest issue—along with 5 in-depth Special Reports—absolutely FREE when you subscribe now. Click here to learn how.