Heinz fiscal 3rd-quarter profit falls

Food maker H.J. Heinz Co. said rising sales in Asia's emerging markets helped its third-quarter revenue rise 13 percent, but the cost of selling frozen food businesses in the U.S. and U.K. cut into its profit, which fell 6 percent.

Heinz, maker of Ore-Ida potatoes and Classico pasta sauce, as well as its namesake ketchup, benefited as consumers ate at home more often during the recession.

But its U.S. sales have fallen for much of the past year, so it is marketing its products more and developing new products - such as its "Dip & Squeeze" ketchup packets due in the fall - and it is focusing on its emerging markets for growth.

Its profit fell to $228.5 million, or 72 cents per share, from $242.3 million in the quarter that ended Jan. 27, or 76 cents per share, a year earlier. But it earned 83 cents per share excluding costs related to selling the two businesses. That's a penny more than the company forecast and 6 cents more than the average prediction of analysts polled by Thomson Reuters, who typically exclude such one-time items.

Heinz earned 76 cents per share last year on that basis.

Heinz, which makes a wide array of products, sold a frozen hors d'oeuvres business in the U.S. and a private-label frozen desserts business in the U.K.

With sales rising 41 percent in Asia and 12 percent in Europe, the company's third-quarter revenue rose to $2.68 billion from $2.38 billion a year earlier. Analysts expected revenue of $2.66 billion. The sales jump in Heinz's Asia and South Pacific region was led by sales in Indonesia, China and India and offset by lower volume in Australia.

The company's North American consumer product sales rose 7 percent to $815 million and its sales to U.S. food service businesses fell 3 percent to $355 million.

Total U.S. volume grew 4 percent, driven by new product introductions, consumer coupons, increased advertising and co-marketing with retailers. The campaign promoted Heinz-branded products in the third quarter and is now expanding to its Weight Watchers Smart Ones, Ore-Ida, Classico and T.G.I. Fridays brands. In the U.K., volume rose 9 percent, helped by a "It has to be Heinz," marketing campaign.

Heinz - which is based in Pittsburgh but derives much of its business in foreign markets - said its growth in emerging markets was driven by nutritional drinks Complan and Glucon D in India, ABC brand sauces and drinks in Indonesia and Heinz ketchup in Russia.

Total volume rose 1.2 percent. CFO Art Winkleblack said volume would have risen 3 percent if not for declines in the company's U.S. Foodservice arm, which suffered from lower consumer spending at restaurants. The company is in the midst of a two-year plan to reduce its product offerings in that unit.

Heinz reiterated its full-year earnings outlook of $2.82 to $2.85 per share from continuing operations. Analysts expect a profit of $2.84 per share.

Shares fell 69 cents, or 1.5 percent, to $45.23 during midday trading.