Spiking sales in emerging markets help Heinz 4Q net income rise 9.7 percent

Heinz pours on 9.7 pct rise in 4Q net income

NEW YORK — Rising revenue in Asia and the Pacific outpaced food maker H.J. Heinz Co.’s growth in the U.S. and Europe and helped its fourth-quarter net income climb 9.7 percent, the company said Thursday.

The maker of Ore-Ida potatoes, Classico pasta sauce and its signature ketchup said cutting costs and raising its prices also helped, by making up for rising ingredient prices.

Heinz, based in Pittsburgh, raised its 2011 dividend 12 cents to $1.80 and offered guidance for the next year in line with Wall Street analysts’ estimates.

The company earned $192.4 million, or 60 cents per share, in the three months that ended April 28. That compares with $175.1 million, or 55 cents per share, a year earlier.

Revenue rose 8.3 percent to $2.72 billion, while volume rose 1.6 percent, led by ketchup and sauces.

Analysts surveyed by Thomson Reuters on averaged predicted Heinz would earned 59 cents per share on revenue of $2.75 billion.

The company spent 63 percent more to market its leading brands during the quarter than it did a year earlier, and it said that spending fostered much of its growth. CEO Bill Johnson told investors on a conference call the company will keep spending this much on marketing around the world and especially in emerging markets, where it wants to position itself early to hook new shoppers on its brands.

He said it’s likely that emerging markets like Russia, China, India and Indonesia will make up one-fourth of revenue in the next several years and 35 percent to 40 percent in the longer term. Asia and the Pacific now produce 20 percent of Heinz’s revenue, while North America and Europe produce 62 percent.

In North America and Europe, revenue rose just under 7 percent each, while revenue in Asia and the Pacific jumped 27.3 percent.

Food makers are increasingly focusing on expanding their businesses in emerging markets like China and India as they deal with slower growth in the U.S. and Europe, where its longtime customers have been switching to less expensive store brands.

That’s also why the company has been increasing its marketing — to keep wooing new shoppers to its brands, which also include Bagel Bites, Weight Watchers’ Smart Ones and Boston Market meals.

The company’s ketchup and sauces make up 43.3 percent of its total revenue. Global ketchup sales rose 7.7 percent, led by Russia, Latin America, Egypt, Britain, France, and China, among other countries.

The U.S. foodservice business — which sells to restaurants and other commercial establishments — posted a 2.4 percent drop in revenue as its customers continued to contend with a market that has people eating out less to save money. The unit’s revenue was $365 million, about 13.4 percent of total quarterly revenue.

For fiscal 2011, the company expects sales growth of between 3 and 4 percent, implying revenue between $10.8 billion and $10.9 billion. It also expects earnings per share growth of 7 percent to 10 percent, implying between $2.92 and $3.20 per share.

Analysts polled by Thomson Reuters expect earnings of $3.09 per share on revenue of $10.79 billion.

For the full year, Heinz reported net income of $864.9 million, or $2.71 per share, down from $923.1 million, or $2.89 per share, a year earlier. Revenue rose from $10.01 billion to $10.49 billion.