Printer Friendly

HEINZ CHAIRMAN OUTLINES GROWTH OPPORTUNITIES FOR SHAREHOLDERS

 PITTSBURGH, Sept. 8 /PRNewswire/ -- Declaring that "brands are back," the chairman of H.J. Heinz Company (NYSE: HNZ) told shareholders at today's annual meeting in Pittsburgh that Heinz overcame fierce competition and a global recession to attain record sales and impressive gains in market share during Fiscal 1993.
 He attributed this success to a far-reaching strategy that promises continual sales and earnings growth in the years ahead.
 "In Fiscal 1993, we established that even in difficult times, brands, such as Heinz, that are properly priced and skillfully marketed will continue to enjoy widespread consumer support," said Anthony J.F. O'Reilly, Heinz chairman, president and chief executive officer. "In Fiscal 1994, we believe we will be able to leverage this durable brand strength for greater profitability."
 New Performance Records
 O'Reilly supported this conclusion with a review of the company's performance. Sales reached a record $7.1 billion in Fiscal 1993, reflecting the highest volume increase in seven years. The rate of Heinz sales growth during the most recent five fiscal years was 6.3 percent.
 "At a time of increased concern by manufacturers and investors about the potential inroads of private label, Heinz achieved unprecedented market shares in almost all major categories, both in the United States and overseas," he reported.
 Excluding the effect of restructuring charges and the adoption of the new accounting standards for retiree health benefits, net income grew at a rate of approximately 11 percent during the past five fiscal years, Heinz's chairman said.
 Boosting Shareholder Returns
 O'Reilly told the shareholders that Heinz's board authorized a 10 percent increase in the quarterly dividend, from 30 cents to 33 cents, representing an indicated annual rate of $1.32 per share. Heinz has increased the dividend on its common stock each year since 1976.
 "The combination of price appreciation and increasing dividends has resulted in good total returns," O'Reilly observed. "Shareholders who reinvested dividends from the beginning of Fiscal 1984 have realized a 10-year total return of 551.5 percent, equivalent to a 20.6 percent compounded annual rate of return. The annual compounded total return for the Standard & Poor's Index during the same decade was 15.6 percent."
 Heinz's chairman then pointed to five "springboards to continual growth" as the explanation for the company's solid brand performance and the source of its future strength.
 Significant Restructuring Initiatives
 The first springboard is restructuring, he indicated. In Fiscal 1993, Heinz took an after-tax restructuring charge of $117 million, enabling the company to undertake a number of important initiatives. These include: reconfiguring manufacturing operations between the United States and Canada; investing in training and technology to downsize Heinz operations in the U.K., in Italy and at Ore-Ida; implementing a transformative agreement with labor unions in Australia; restructuring the administration of Weight Watchers International; consolidating sales service functions in North America within the recently established Heinz Service Company; and combining the administration of Heinz Pet Products and StarKist.
 "These and other initiatives will accomplish in nearly one year the productivity advances that otherwise would have required three years," he said. "We are confident we can grow our brands and build our margins if we remain the unquestioned low-cost operator."
 Substantial Marketing Support
 The second springboard Heinz's chairman cited was substantial marketing support, which exceeded $1.5 billion last year. Heinz mixes and matches its marketing methods to suit the brand, the product, the location and the times, he told the shareholders.
 On the one hand, Heinz is using television advertising to achieve an eight-fold increase in sales of its new Salsa-Style Ketchup, O'Reilly noted. On the other hand, StarKist has increased volume 17 percent with virtually no TV advertising, while boosting the total share for its light-meat tuna brands near an all-time high of 50 percent.
 O'Reilly pointed to other noteworthy volume increases, including a 25 percent jump for Weight Watchers brand frozen foods, a leap of more than 11 percent in Ore-Ida's sales and an 8 percent improvement in worldwide sales of baby food.
 Noting the continuing exceptional performance of Heinz's big brands around the world, O'Reilly maintained that "the brand equity of Heinz is an important global resource." He informed his audience that approximately 60 percent of Heinz's worldwide sales are in number-one brands.
 "Just as two years ago we predicted that value would be king, today we predict that brands are back -- not all brands and not in all categories," he added. "We believe number-one and number-two brands will grow stronger, that brands will grow rapidly in Asian and European markets and that food brands will avoid the challenges facing the health and drug industry."
 A Leader in Innovation
 Heinz's third springboard to growth is innovation, O'Reilly said. According to him, "Leading brands like Heinz can capture the imagination of consumers around the world with a constant flow of new recipes, new products and new ideas."
 Heinz produced 500 new products worldwide in Fiscal 1993, he observed. Specifically, Weight Watchers Food Company was honored as new products company of the year by Food Business magazine, for such breakthroughs as Smart Ones(TM) frozen entrees, with only one gram of fat. Meanwhile, Ore-Ida produced Fast Fries frozen French fries and frozen mashed potatoes among its 59 new offerings for either retail, warehouse clubs or foodservice.
 "This is the kind of product development and speed to market that signifies a successful leading brand," O'Reilly said. "It will help keep Heinz ahead of the curve as the decade continues to unfold."
 Strategic Acquisition
 Heinz's fourth springboard is acquisition, the chairman noted. In Fiscal 1993, Heinz made its largest offshore purchase, Wattie's Limited in New Zealand, for approximately $300 million. The number-one New Zealand food brand, Wattie's also has great potential as a low-cost operator and strong exporter of products along the Pacific Rim. This, O'Reilly explained, gives Heinz "the means to build our markets throughout Asia, whose newly industrialized countries are growing at a rate of 6 percent each year."
 Another important acquisition for Heinz in 1993 was Arimpex, a major Italian foodservice company. O'Reilly linked this with the recent purchase of Moore's and Domani, leading U.S. foodservice brands that complement Heinz's 1991 acquisition of JLFoods. That transaction, O'Reilly recalled, made Heinz a leading company in North America's foodservice business, which grew by nearly 5 percent this past year.
 "So we continue to be on the lookout for further ways to strengthen our portfolio and we will use acquisitions as an important tool to cultivate global growth," he said.
 Applying Global Leverage
 The fifth springboard Heinz's chairman pointed to was global leverage. He defined this as the basic reconfiguration of Heinz's worldwide manufacturing, supply and distribution systems to optimize the company's manufacturing capability across the world. The liberalization of trade in North America, the European Community and Asia provides Heinz an unprecedented opportunity to attain world-class efficiency and global economies of scale, he observed.
 O'Reilly noted that global leverage in procurement of raw materials is producing striking results. By seeking out the most efficient suppliers around the world and consolidating purchasing across all Heinz affiliates, he said, Heinz's Global Procurement Task Force is achieving significant savings now and aiming for even greater cost reduction in the future.
 "Our company has powerful brands and the global capacity to strengthen their leadership," O'Reilly concluded. "Despite the competition and the economic challenges, the brands of Heinz remain the first choice of consumers around the world. We will continue to strive for nothing less."
 /delval/
 -0- 9/8/93
 /CONTACT: D. Edward I. Smyth, vice president-corporate affairs, 412- 456-5780, or Debora S. Foster, general manager-corporate communications,
412-456-5778, of H.J. Heinz; or John E. Kennedy or L. Michael Kelly


Jr., of Ketchum Public Relations, 412-456-3586, or 412-456-3840, for H.J. Heinz/
 (HNZ)


CO: H.J. Heinz Company ST: Pennsylvania IN: FOD SU:

CD -- PG017 -- 9918 09/08/93 15:11 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Sep 8, 1993
Words:1307
Previous Article:MORTON AND BOSCH FORM JOINT VENTURE
Next Article:PEP BOYS DECLARES DIVIDEND
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters