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Heinz Chairman Reaffirms Fiscal Year 2009 EPS Outlook of $2.87 to $2.91 at Annual Consumer Analyst Group of New York (CAGNY) Co

^{Published on 2009-02-18 09:44:24, Last Modified on 2009-02-18 09:46:52 - Market Wire}
 

PITTSBURGH--([ BUSINESS WIRE ])--At the Annual Consumer Analyst Group of New York (CAGNY) Conference in Boca Raton, Florida, Heinz (NYSE: HNZ) Chairman, President and Chief Executive Officer William R. Johnson reaffirmed Heinz's fiscal year 2009 earnings per share outlook of $2.87 to $2.91, a growth rate of 9% to 11%.

Commenting on Fiscal 2009, Mr. Johnson said, "We expect to deliver Heinz's key financial targets for Fiscal 2009:

• Organic sales growth (combined volume and net price) of 6 percent;
• EPS in a range of $2.87 to $2.91, a growth rate of 9% to 11%; and
• Operating free cash flow (cash from operations less capital expenditures net of proceeds from disposal of PP&E)of around $850 million."

Excerpts from Remarks:

In a speech which focused on how Heinz is optimizing its performance by focusing on its Five C's: Consumers, Costs, Commodities, Cash and Currency, Mr. Johnson said, "We remain confident in the strategies that have produced industry-leading top and bottom-line results over the past three years.

These strategies are:

1. Grow the Core Portfolio;
2. Accelerate Growth in Emerging Markets;
3. Leverage Our Global Scale; and
4. Make Talent an Advantage."

Heinz's Dividend

Mr. Johnson continued, "Our dividend has grown in each of the last six years since adjusting for the Del Monte spin-off and continuing to grow the dividend is a top priority, supported by strong cash flow metrics, which have historically been among the best in the industry."

Consumer

"Consumers are not only eating in more often, they are becoming increasingly more particular and sophisticated shoppers. The weekly trip to the supermarket is now accompanied with grocery lists and coupons or replaced altogether with multiple trips in different channels geared specifically to cost-effectively optimizing the family's day-to-day menu."

Private Label

"Private label and strong brands can indeed co-exist. Private label needs strong brands to innovate and bring news and excitement to consumers. We understand our role in driving traffic in our categories, while our retail customers strategically use store brands to accommodate a discount-oriented subset of consumers. These economic times will clearly test consumer goods companies; but research confirms that consumers still prefer leading brands in most categories."

Investing In Brands

"Going forward, our innovation will be focused more on well-tested ideas, as well as breakthrough ideas like Ore-Ida® Steam n' Mash™. Now is the time to emphasize core products and categories, and avoid experimentation."

Emerging Markets

"Emerging Markets remain among the most significant long-term growth opportunities for Heinz. We have built capable manufacturing, distribution and sales infrastructures, that have given us a significant leg up in these markets, but we still have only scratched the surface of their potential. Heinz's Emerging Markets have generated excellent returns over the last several years and they now contribute an increasing share of both sales and profits. We expect that trend to accelerate in the coming years."

U.S. Foodservice

"We have seen significant changes in consumer dining patterns as QSR's have benefited at the expense of virtually every other segment. We are uncertain as to how these trends will evolve as economic conditions improve, but regardless, we need to reposition our business to take advantage of our strong brands, while also driving out cost and improving margins. We are placing a higher emphasis on our branded front-of-house business, particularly Heinz® Ketchup."

Costs

"Reducing costs to drive margins will become increasingly important going forward as we anticipate an industry-wide slow down in price-driven top-line growth."

Commodities

"Despite a general decline in commodity inflation, some key inputs remain above historic levels and we are still working through hedged positions. We do see some improvement coming."

Pricing

"I would note that the majority of our pricing to offset commodity inflation has been implemented."

Currency

"Global currency shifts continue to be among the most volatile in history. We have, in many cases, seen five years of increasing dollar weakness more than wiped out in three months. The currency issue, we believe, is cyclical and, therefore, we will not allow it to deter us from our strategy or long-term plans."

Fiscal 2010 Guidance

Finally, Mr. Johnson noted that, "We will not provide any guidance for Fiscal 2010 since our new year does not commence until May. The current global economic environment, particularly as it pertains to currency and commodities, remains too volatile and unpredictable to make reliable forecasts this far in advance. What I can say at this point is that we expect positive top and bottom-line growth on a constant currency basis."

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS:

This press release and our other public pronouncements contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified by the words "will," "expects," "anticipates," "believes," "estimates" or similar expressions and include our expectations as to future revenue growth, earnings, capital expenditures and other spending, dividend policy, and planned credit rating, as well as anticipated reductions in spending. These forward-looking statements reflect management's view of future events and financial performance. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond Heinz's control, and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Factors that could cause actual results to differ from such statements include, but are not limited to:

• sales, earnings, and volume growth,
• general economic, political, and industry conditions, including those that could impact consumer spending,
• competitive conditions, which affect, among other things, customer preferences and the pricing of products, production, and energy costs,
• competition from lower-priced private label brands,
• increases in the cost and restrictions on the availability of raw materials, including agricultural commodities and packaging materials, the ability to increase product prices in response, and the impact on profitability,
• the ability to identify and anticipate and respond through innovation to consumer trends,
• the need for product recalls,
• the ability to maintain favorable supplier and customer relationships, and the financial viability of those suppliers and customers,
• currency valuations and interest rate fluctuations,
• changes in credit ratings, leverage, and economic conditions and the impact of these factors on the cost of borrowing and access to capital markets,
• our ability to effectuate our strategy, which includes our continued evaluation of potential acquisition opportunities, including strategic acquisitions, joint ventures, divestitures and other initiatives, including our ability to identify, finance and complete these initiatives, and our ability to realize anticipated benefits from them,
• the ability to successfully complete cost reduction programs and increase productivity,
• the ability to effectively integrate acquired businesses,
• new products, packaging innovations, and product mix,
• the effectiveness of advertising, marketing, and promotional programs,
• supply chain efficiency,
• cash flow initiatives,
• risks inherent in litigation, including tax litigation,
• the ability to further penetrate and grow in international markets, economic or political instability in those markets, particularly in Venezuela, and the performance of business in hyperinflationary environments,
• changes in estimates in critical accounting judgments and changes in laws and regulations, including tax laws,
• the success of tax planning strategies,
• the possibility of increased pension expense and contributions and other people-related costs,
• the potential adverse impact of natural disasters, such as flooding and crop failures,
• the ability to implement new information systems and potential disruptions due to failures in information technology systems,
• with regard to dividends, dividends must be declared by the Board of Directors and will be subject to certain legal requirements being met at the time of declaration, as well as our Board's view of our anticipated cash needs, and
• other factors described in "Risk Factors" and "Cautionary Statement Relevant to Forward-Looking Information" in the Company's Form 10-K for the fiscal year ended April 30, 2008.

The forward-looking statements are and will be based on management's then current views and assumptions regarding future events and speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the securities laws.

ABOUT HEINZ: H. J. Heinz Company, offering "Good Food Every Day"™ is one of the world's leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz provides superior quality, taste and nutrition for all eating occasions whether in the home, restaurants, the office or "on-the-go." Heinz is a global family of leading branded products, including Heinz® Ketchup, sauces, soups, beans, pasta and infant foods (representing over one third of Heinz's total sales), Ore-Ida® potato products, Weight Watchers® Smart Ones® entrees, Boston Market® meals, T.G.I. Friday's® snacks, and Plasmon infant nutrition. Heinz is famous for its iconic brands on five continents, showcased by Heinz® Ketchup, The World's Favorite Ketchup®. Information on Heinz is available at [ www.heinz.com ].