Dear Fellow Shareholder:
I am proud to report that Heinz delivered record sales of $10.5 billion, as well as record gross profit of $3.8 billion and record operating free cash flow of almost $1.1 billion in Fiscal 2010. Our excellent results reflected increased innovation and marketing behind our leading brands and dynamic growth in Emerging Markets, where new middle-class consumers are discovering the premium quality, taste, nutrition, convenience and value of our branded foods.
Importantly, Heinz excelled amidst a credit crisis and the worst recession in decades, confirming the quality of our businesses and brands and the capabilities of our people. Heinz achieved virtually all of its financial targets for the year despite weak economies in the U.S. and Europe.
In the fiscal year ended April 28, 2010, your Company:
- Grew sales by 4.8%, led by double-digit sales growth in Emerging Markets and solid growth in our Top 15 brands.
- Delivered strong earnings per share of $2.87 from continuing operations, exceeding the top end of our revised range of $2.82 to $2.85 after raising our outlook twice during the year.
- Reported net income of $914.5 million from continuing operations and total Company net income of $864.9 million (including discontinued operations).
Importantly, the Company’s success in generating consistently strong operating free cash flow ($4.6 billion over the last five years) enabled us to raise the annualized common stock dividend for Fiscal 2011 by 12 cents, to $1.80 per share. The dividend has grown almost 67% over the last seven years since being adjusted to reflect the Del Monte spinoff in Fiscal 2003. In that time span, Heinz has returned more than $3 billion to our shareholders through dividend payments.
In Fiscal 2010, Heinz also produced a top-tier return on invested capital of 18.7%(1), one of the best in the Company’s history. Moreover, our gross profit margin improved by 50 basis points on higher productivity and pricing. Finally, Heinz has now delivered a total shareholder return of almost 50% over the past five years, significantly outperforming the S&P 500.
(1) Excludes 90 basis point impact of losses from discontinued operations