Monday affirmed earnings guidance for this year and next and touted a restructuring plan that it says has created an unusually high amount of shareholder value since 2002.
Heinz sees pro forma earnings of $2.11 to $2.16 a share this year and predicted roughly 8% growth over that base in 2007, implying $2.27 to $2.33 a share. Analysts surveyed by Thomson First Call are forecasting earnings of $2.07 a share in 2006 and $2.25 a share in 2007.
The company also pegged 2007 sales growth at 3% to 4%. Analysts see overall sales of $8.85 billion this year and $8.72 billion in 2007.
Heinz shares closed at $39.84 Friday, up about 13% from the start of 2002, the year the company undertook a restructuring program that included the spinoff of Del-Monte and other assets. Factoring in dividends, Heinz says, the restructuring has raised total return to shareholders to above 40%, roughly twice the gain among its peers.
In a letter to shareholders accompanying Monday's earnings guidance, Heinz CEO William Johnson said the company is wrapping up the restructuring and is poised for a more focused run at growth. The comments come about two months after activist Nelson Peltz disclosed a minority stake in the ketchup maker.
"With a more focused portfolio, Heinz will devote its energy and resources primarily to the six major developed markets of the U.S., Canada, U.K., Italy, Western Europe and Australia/New Zealand," Johnson wrote. "In these markets, Heinz will increase consumer support and leverage key demographic trends and consumer insights to improve value to customers and consumers. Our goal is to generate approximately 15% of total sales from new products that have been launched in the prior 24 months."
Johnson said Heinz will "substantially increase" consumer marketing spending in fiscal 2007.