DEAR FELLOW SHAREHOLDER:
click chart to enlarge
I am pleased to tell you that Heinz delivered record sales and profit in Fiscal 2009 despite the difficult global economic environment. The Company’s strong growth and high performance reflects superb execution of our long-term plan, which consists of four strategic pillars: Grow our Core Portfolio; Accelerate Growth in Emerging Markets; Strengthen and Leverage our Global Scale; and Make Talent an Advantage.
Our exceptional results also reflect the strength of our focused global portfolio, our great brands, the skillful leadership of our senior management team, and the talent and dedication of our people. Here is what we accomplished together in Fiscal 2009:
- Record sales of more than $10.1 billion.
- Record net income of $923 million, an increase of 9.2% versus last year.
- Earnings per share growth of 10.3%, to $2.90/share.
- Strong Operating Free Cash Flow of $880 million.This was well above our goal, making it possible to
underwrite continued dividend growth for our shareholders.
Fiscal 2009 marked the culmination of an excellent three-year period for Heinz, with results ranking among the best in the packaged food industry. Over the last three years, your Company’s sales and EPS grew at an average annual growth rate of more than 5% and 11%, respectively. Operating Free Cash Flow averaged almost 110% of net income and our after-tax Return on Invested Capital increased 360 basis points to 18.4% over the three years.
The Company’s consistently strong Operating Free Cash Flow ($3.5 billion over the last four years) has enabled us to raise the common stock dividend at an average annual growth rate of almost 8% over the last six years, including a $0.02 increase on an annualized basis that was announced in May 2009. The increase signaled our confidence in the future of Heinz and our commitment to returning a high percentage of earnings to our shareholders. Our dividend has grown 56% since being adjusted to reflect the Del Monte spinoff in Fiscal 2003, which transformed Heinz by shedding non-core businesses so the Company could pursue faster growth with a leaner, more focused global portfolio.
click chart to enlarge
In this value-oriented economy, Heinz continues to connect with
consumers. Our Top 15 brands delivered excellent growth in Fiscal 2009
while contributing about 70% of the Company’s total sales.
Heinz achieved strong results in Fiscal 2009 despite the severe global recession, which has affected equity markets, home values, the cost of credit, the value of foreign currencies and consumer behavior. The Company’s consistent performance over the last three years reflects our decision to stay the course and:
- Execute a proven business plan focused on three core categories.
- Build strong operations in key Developed Markets and fast-growing Emerging Markets.
- Produce desirable products that consumers around the world trust to deliver high-quality, taste, nutrition and convenience.
- Invest in research and development and marketing to drive growth.
- Accelerate innovation and new product development.
- Maintain our financial strength and liquidity to support growth and provide a healthy dividend to our shareholders.
- Pursue high ethical standards in all aspects of our business.
- Build the best team in the food industry.
