- 19Nov
(Reuters) - H.J. Heinz Co (HNZ.N) posted weaker-than-expected quarterly sales and said U.S. consumers remain frugal, sending the ketchup maker's shares lower.
Yet the company, which also makes Ore-Ida frozen potatoes and Smart Ones frozen entrees, topped analysts' profit expectations, helped by growth in emerging markets, and raised the target for how much free cash it expects to generate this fiscal year.
"U.S. consumers are in a funk," said Chief Executive William Johnson, noting that use of coupons is up 5 percent this year. Recent government data shows the U.S. job market improving slightly, but not enough to dent a 9.6 percent unemployment rate.
Heinz said it expects sales from foodservice customers, which include restaurants, to improve in its fiscal second half, begun October 28, and to be about flat with a year earlier, as some consumers come out of hibernation.
Heinz shares fell 1.1 percent in morning trade to $47.68.
Profit in the second quarter, ended October 27, was $251.4 million, or 78 cents a share, compared with $231.4 million, or 73 cents a share, a year earlier.
Analysts on average were expecting 76 cents per share, according to Thomson Reuters I/B/E/S.
Sales dropped 1.2 percent to $2.61 billion, hurt by the impact of foreign exchange rates, and fell short of analysts' expectations for $2.67 billion.
Sales volume increased 0.3 percent, driven by 2.6 percent growth in emerging markets. Price increases lifted sales by 0.6 percent.
Heinz said it is still on track to deliver fiscal 2011 growth of 3 percent to 4 percent in sales and 7 percent to 10 percent in earnings per share. It raised its free cash flow target by 15 percent to $1.15 billion.
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