Despite an 8 percent increase in profits, the company's stock fell because of sales concerns.
J-W Staff and Wire Reports
Pittsburgh -- H.J. Heinz Co., the maker of ketchup, pet food, soups and other food products, said Wednesday its fiscal first-quarter operating profits rose, but still fell just shy of Wall Street projections amid weaker-than-expected sales.
Heinz said first-quarter profits rose 8.3 percent on increased sales of ketchup, sauces, soups, beans and pasta meals. The company called "disappointing" the performance of its pet food products.
Excluding one-time charges, the company earned $236.9 million, or 65 cents a share, in the quarter ended July 28, compared to $223.3 million, or 60 cents a share, in the same period a year ago.
The results were a penny short of analysts' expectations.
The one-time charges included $21.1 million in restructuring costs and $20 million set aside for losses in an Ecuadorean tuna plant.
Including those items, Heinz had net income of $206.7 million, or 57 cents per share, compared to $213.8 million, or 58 cents per share, a year ago.
Sales fell about 2 percent, from $2.22 billion to $2.18 billion due to divestitures, lower prices and unfavorable foreign exchange rates.
Heinz said sales of ketchup, sauces and condiments jumped 12.7 percent in the first quarter compared to the same quarter a year ago. Sales of soups, beans and pasta meals increased 3 percent since last year.
Heinz President and Chief Executive Officer William R. Johnson said Heinz Pet Products, which employs about 165 people in Lawrence, was "working hard to regain its footing," after a disappointing performance in fiscal 1999. "We are taking aggressive action to ensure a turnaround on this business in the second half of the new fiscal year," he said.
The company also announced a 7.3 percent increase in the quarterly dividend, or an increase in the annual dividend from $1.37 to $1.47 per share.
Separately, the company reminded investors that it expects to close on the sale of the Weight Watchers weight control business at the end of September. The agreed sales price of $735 million is expected to result in a pretax gain of approximately $500 million, which will be used to retire debt and finance $29 million in costs related to the unbudgeted national launch of the new Boston Market Home Style Meals line in this fiscal year.
Shares of Heinz fell 31 1/4 cents to $45.12 1/2 in trading on the New York Stock Exchange.
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