HEINZ CHAIRMAN DETAILS SUCCESSES FOR SHAREHOLDERS
HEINZ CHAIRMAN DETAILS SUCCESSES FOR SHAREHOLDERS PITTSBURGH, Sept. 8 /PRNewswire/ -- The chairman of H.J. Heinz
Company (NYSE: HNZ) told shareholders at today's annual meeting in Pittsburgh that Heinz's strategy of renewal had achieved dramatic results in Fiscal 1992 and positioned the company for sustainable long-term growth in sales and earnings per share.
"In effect, we have created a 'New Heinz' that we believe will continue to grow at record levels in the decade of the '90s," said Anthony J.F. O'Reilly, Heinz chairman, president and chief executive officer. Financial Growth Yields Shareholder Returns O'Reilly pointed to the first quarter of Fiscal 1993 as indication of the company's progress. He noted a significant increase in operating performance, with a 4.3 percent jump in sales over the same period the prior year. Calling quarterly earnings of 55 cents per share "on track and in line with expectations," O'Reilly reaffirmed his March forecast that Fiscal '93 earnings per share would reach $2.60. "This year we expect sales to exceed $7 billion," Heinz's chairman said of the coming year. He reported that in Fiscal 1992 sales were $6.6 billion, operating income reached a record $1.1 billion and net income advanced 12.4 percent to $638 million. O'Reilly informed his audience that Heinz's board authorized an 11.1 percent increase in the quarterly dividend, from 27 cents to 30 cents per share, representing an indicated annual rate of $1.20 per share. Heinz has increased the dividend on its common stock in each year since 1976. "Appreciation in the market value of Heinz stock plus a growing dividend have produced substantial total returns for Heinz shareholders," O'Reilly observed. "Reinvesting dividends from the beginning of Fiscal 1982 has produced a ten-year total return of 786.5 percent, equivalent to a 24.4 percent compounded annual rate of return." Winning the Brand Battles Heinz's financial achievements flowed from the aggressive advance of its brands, O'Reilly stated. "In Fiscal 1992 we said we would go on the attack and we did, with gratifying results," he added. In recent years, Heinz invested more than $600 million in a "quiet restructuring" involving new product development and marketing, portfolio improvement, training of employees and modern technology. As a result, Heinz's core brands reached exceptional levels of market share and profitability. O'Reilly cited the "marketing ingenuity" that earned Heinz ketchup a leading 53 percent market share in the U.S., as well as a growing market presence in Europe and Asia. He forecast that Heinz ketchup would be a billion-dollar world brand in the foreseeable future. He also noted the exceptional performance of Heinz's other core brands in the United States: -- Ore-Ida captured 46 percent of the frozen potato market; -- 9-Lives has restored its market share to nearly 23 percent in canned cat food; -- StarKist holds more than 40 percent of the tuna market; -- the Weight Watchers brand raised its frozen-entree volume by 26.2 percent, to take an 11.8 percent share of that category; -- Weight Watchers brand frozen desserts topped all competitors, low-calorie or full-calorie, with an "incredible market share of 32 percent."
A Steady Flow of New Products
An important strategy for winning its "brand battles" is product innovation, O'Reilly said. He pointed to a continual flow of new Heinz offerings. Weight Watchers Food Company in particular has been an engine of innovation, he observed. In addition to its Ultimate 200 and Stir Fry lines, the company recently launched Smart Ones, a "revolutionary product with wonderful taste and only one gram of fat." Eighteen new Weight Watchers brand desserts also showed "Olympic" speed in getting to market, he recalled. O'Reilly noted that "where Weight Watchers is competing with Healthy Choice it's outselling them two to one." And Weight Watchers International, with more than five million participants in its weight-loss programs every year, expects to have its line of Personal
Cuisine brand foods in 220 new and specially equipped Weight Watchers centers by next April.
He noted that Weight Watchers brand foods combined with the meeting system have total global sales in excess of $1.8 billion for the company and its franchisees. A renewed Ore-Ida has exciting discoveries of its own, Heinz's chairman stated. He announced that on Oct. 5, Ore-Ida will begin shipping nationally its "hottest" new product: Fast Fries, lightly cooked shoestring potatoes that can be prepared in minutes in a conventional oven. "This will be the first time that the taste and texture of a McDonald's or Burger King or Wendy's French fry can be created in American homes at half the price of fast food restaurants," he said. Fast Fries will complement the trio of products Ore-Ida has launched in the last four months: Nacho Crispers, Texas Crispers and Ranch Baked Potatoes. O'Reilly also reported highly favorable consumer test responses to Ore-Ida Mashed Potatoes, a product with "enormous potential." StarKist, too, has entered a new market through innovation, O'Reilly observed, referring to the introduction of Charlie's Lunch Kit. The first complete package for making fresh tuna salad away from home, Charlie's Lunch Kit is proving to be "a terrific success, with expected sales of two million cases this year." Investing in the Future O'Reilly attributed much of Heinz's renewed vigor to its ongoing modernization. "We could not continue to win these brand battles and introduce so many new products without the investment we made in productive and competitive factories," he stated. O'Reilly made special note of the $116 million revitalization of Heinz's Pittsburgh plant, scheduled for an official opening on Oct. 14. "The line speeds are phenomenal and will give us a much-needed advantage in key product areas," he explained. The other major modernizations he cited were Heinz Pet Products' Bloomsburg, Pa., pet food plant, Heinz-U.K.'s Kitt Green Eurofactory and Heinz-Italia's Latina baby food facility. A major source of internal strength, according to O'Reilly, was the "catalytic success" of Heinz's four task forces in centralizing and changing procurement practices and contributing to cost and marketing and selling efficiencies. He told the audience that Heinz's task forces would generate ongoing savings of $100 million per year. Growth Through Acquisitions O'Reilly reported that Heinz's JLFoods acquisition, the company's largest, was "succeeding beyond our expectations." He noted that acquisitions have made Heinz the third-largest manufacturer of frozen bakery products in North America. Joint ventures have opened dynamic new markets in developing economies, O'Reilly told the shareholders. The most recent, a Hungarian company called Magyar Foods, will be an important production base for both Eastern Europe and Germany, he said. Earlier in the year, Heinz's chairman recalled, he had opened a factory in Egypt for a joint venture, Cairo Foods Industries, which will give Heinz greater access to the markets in Saudi Arabia and the Gulf states. A Potent Marketing Strategy "The most potent weapon in our armory is marketing," O'Reilly said. He told the shareholders that Heinz's marketing mix changes constantly. "At times the emphasis is on television and consumer marketing...in recessionary times like today it's price." He anticipated that "this year our marketing expenditure will be approximately in line with the amount spent last year." "What is abundantly clear is that our strategies are working," he maintained. "Our brands are clearly on a long-term trend toward growth accompanied by expanding profit margins and marketing borne of greater productivity and lower costs." The Will to Win Recalling his visits to Heinz affiliates and factories, O'Reilly reflected on the determination and "will to win" of Heinz employees around the world. "I want Heinz to remain an inspiration for all those who work for it. I want all employees to know that we are among the best of the best," he concluded. "Fiscal 1993 is the year of a 'New Heinz.' Together, we are forging a vision to ensure Fiscal 1993 is the year of a 'New Heinz.' Together, we are forging a vision to ensure that this great company will remain one of the most respected and profitable food companies in the world." -0- 9/8/92 R /CONTACT: D. Edward I. Smyth, VP - corp. affairs, 412-456-5780, or Debora S. Foster, gen. mgr. - corp. communications, 412-456-5778, both of H.J. Heinz; or John E. Kennedy or L. Michael Kelly Jr., 412-456-3586, or 412-456-3840, both of Ketchum Public Relations, for H.J. Heinz/ (HNZ) CO: H.J. Heinz Company ST: Pennsylvania IN: FOD SU:
CD -- PG004 -- 7149 09/08/92 16:20 EDT
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|Date:||Sep 8, 1992|
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