Heinz 2nd-quarter profit drops 6 percent

/ Source: The Associated Press

H.J. Heinz Co., which makes ketchup and a range of other foods, said Thursday its fiscal second-quarter profit slipped 6 percent, reflecting a higher tax rate and the impact of discontinued operations.

But revenue grew by about 3.5 percent, led by U.S. ketchup sales, and the Pittsburgh-based company raised its fiscal 2007 earnings outlook.

Heinz chairman, president and CEO William R. Johnson said the results reflected a growth plan introduced June 1, when Heinz was embroiled in a proxy fight with dissident investors led by billionaire Nelson Peltz.

Peltz and his ally Michael Weinstein won seats on the Heinz board after waging a campaign to drive up shareholder returns. The new board has been “working collaboratively,” Johnson said in a conference call with analysts and reporters.

“This was a strong quarter for Heinz,” he said. “These results confirm our progress.”

Heinz said profit for the three months that ended Nov. 1 fell to $191.6 million, or 57 cents per share, from $203.8 million, or 60 cents per share, during the same period last year.

The results included discontinued operations and a quarterly tax rate of 34.8 percent compared with 23.8 percent during the year-ago period. It said its income from continuing operations was 59 cents per share.

Revenue rose to $2.23 billion from $2.16 billion last year, helped by strong sales of its Heinz brands, Weight Watchers Smart Ones meals, Classico pasta sauces and other products.

The results fell short of Wall Street estimates of 60 cents per share on $2.25 billion in revenue, according to a Thomson Financial poll.

Heinz raised its fiscal 2007 earnings outlook to a range of $2.35 to $2.39 per share. Earlier in November, Heinz predicted full-year earnings of about $2.35 per share. Analysts expect full-year earnings of $2.35 per share.