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Heinz posts 'solid' Q1 results

H.J. Heinz Corporation II announced financial results for Q1 2015, which indicate solid business performance.

May 15, 2015

H.J. Heinz Corporation II announced financial results for Q1 2015, which indicate solid business performance, the company said in a press release.

"We continued to make strong progress on the transformation of our business during the first quarter of the year," said Heinz CEO Bernardo Hees in a statement. "First quarter results were consistent with our expectations and we remain on track to deliver on our internal targets for the year. We are confident that our cost discipline and investment in our brands will continue to drive sustainable and profitable growth."

Net revenues came in $2.48 billion in the first quarter, down 11.5 percent versus the year-ago period, due to an organic net revenue decline of 4.5 percent and an unfavorable currency impact of 7.0 percent, the company said.

The decline in organic net revenues primarily reflected a comparison with unusually high product shipments in the prior year period, as the company shipped safety stock to retailers ahead of the commencement of SAP implementation efforts in North America in Q2 2014, as well as the ongoing impact of product rationalization.

Ketchup and Infant organic revenues grew by single-digits globally, led by Venezuela and Russia, and the company’s Soy Sauce business in China grew by double-digits. However, a double-digit decline in the frozen meals category impacted US revenues, and category declines in the UK and Italy impacted Europe revenues.

Adjusted EBITDA of $651 million fell 5.4 percent versus the same period, attributed to an unfavorable currency impact of 5.8 percent and the impact of the SAP implementation in North America. Organic adjusted EBITDA came in flat compared to the prior year. Current quarter results benefited from net price gains and cost savings mainly driven by zero-based budgeting and manufacturing footprint optimization, the announcement said.

For full-year 2015, the company expects that adjusted EBITDA will increase on a nominal basis relative to the full-year 2014 EBITDA of $2.84 billion despite the anticipated unfavorable impact from foreign currency. The company predicts the performance to be driven by the continuation of its cost savings programs, net price gains in developed markets and category growth in emerging markets.