(By Balaseshan) Ketchup and soups maker H.J. Heinz Co. (NYSE:HNZ) reported better-than-expected quarterly earnings and reiterated strong growth forecast reflecting double-digit growth in Emerging Markets as well as improved productivity and higher margins.
H.J. Heinz said the first quarter results reflected double-digit sales growth in Emerging Markets, improved results in the U.S. and Australia, higher volume and pricing, improved productivity and a favorable tax rate.
Earnings were $258.03 million or $0.80 per share for the first quarter, up from $226.11 million or $0.70 per share in the year-ago quarter.
Excluding special charges for productivity initiatives last year, earnings per share (EPS) grew 10.1 percent to 87 cents. EPS this year was reduced by $0.04 from unfavorable foreign currency translation and translation hedges.
Sales declined 1.5 percent to $2.79 billion, reflecting the unfavorable impact of 5.6 percent from foreign currency exchange rates.
Analysts, on average, polled by Thomson Reuters expected earnings of 80 cents per share on sales of $2.84 billion.
In the preceding fourth quarter, H.J. Heinz earned 81 cents excluding special charges on sales of $3.05 billion.
In Emerging Markets, organic sales jumped 19.3 percent and represented a record 26% of total company sales. Global Ketchup registered organic sales gains of 3.7 percent, boosted by increase in sales in Brazil, Russia and China. The company's Top 15 Brands posted increase in organic sales of 5.9 percent.
Gross profit margin, excluding charges, increased 120 basis points to 35.9 percent, driven by higher pricing and productivity, which more than offset higher commodity costs.
Looking ahead for fiscal 2013, the Pittsburgh, Pennsylvania-based company said it is on track to meet its forecast for fiscal 2013. It sees EPS from continuing operations in the range of $3.52 to $3.62, on organic sales growth of at least 4 percent. Analysts expect EPS of $3.51 for the year.
For fiscal 2013, the company anticipates constant currency EPS growth of 5% to 8% on a continuing operations basis and excluding special items in fiscal 2012. Strong operating free cash flow is predicted to be more than $1 billion.
The stock, which has been trading in the 52-week range between $48.54 and $58.31, closed Tuesday's regular trading up 1.68% at $57.41.