Growth and Financial Performance
Heinz delivered record annual sales exceeding $10 billion in both Fiscal Years 2008 and 2009, with solid growth in net income and earnings per share each year, led by higher sales of our top brands and dynamic growth in our Emerging Markets.
In Fiscal 2008, net income grew 7.5% to $844.9 million and earnings per share increased 11.4% to $2.63. The Company’s reported sales rose 11.9% to $10.07 billion, reflecting strong growth in Europe, North America and Emerging Markets.
In Fiscal 2009, Heinz delivered record sales and profit in a difficult global economic environment as net income rose 9.2% to a record $923.1 million and earnings per share grew 10.3% to $2.90 a share. The Company’s reported sales increased to $10.15 billion, led by strong performances in Emerging Markets and North American Consumer Products and higher sales of ketchup and our top brands.
(1) Cash provided by operating activities was $1,166,882, $1,188,303, $1,062,288 and $1,074,961 for Fiscal 2009, 2008, 2007 and 2006, respectively. Capital expenditures were
$292,121, $301,588, $244,562 and $230,577 for Fiscal 2009, 2008, 2007 and 2006, respectively. Proceeds from disposals of property, plant and equipment were $5,407, $8,531,
$60,661 and $19,373 for Fiscal 2009, 2008, 2007 and 2006, respectively (Dollars in thousands)
(2) Totals may not add due to rounding
(3) All Fiscal 2006 results throughout this document are from continuing operations, excluding special items
Our global portfolio performed well over the two-year period as Heinz benefited from the increased trend of at-home dining, strong growth in our Emerging Markets, sustained organic sales growth (volume plus price) in our core brands, new product innovation and other factors.
In particular, Emerging Markets, which include markets such as Russia, India, Indonesia, China, Poland and Latin America, as well as The Czech Republic, Egypt, the Middle East and South Africa, delivered a growing percentage of the Company’s total sales as our brands connected with the emerging middle-class consumer in those regions of the world.
Heinz sales in Emerging Markets grew 24.8% in Fiscal 2008 and 8.8% in Fiscal 2009, while delivering a disproportionate percentage of the Company’s total sales growth in 2009.
Overall, Emerging Markets generated 13% of our total sales in Fiscal 2008 and 14% in Fiscal 2009, up from 11% in Fiscal 2006.
With a solid infrastructure, excellent brands and capable local market leadership in fast-growing developing nations, we expect Emerging Markets to generate approximately 20% of our total sales by Fiscal 2013 as the middle-class expands in these dynamic markets.
In our core categories:
- Ketchup and Sauces sales grew 10.9% to $4.08 billion in Fiscal 2008 and 4.2% to $4.25 billion in Fiscal 2009
- Meals and Snacks sales rose 12.3% to $4.52 billion in Fiscal 2008 and declined 3.5% to $4.36 billion in Fiscal 2009
- Infant/Nutrition sales grew 17.3% to $1.09 billion in Fiscal 2008 and 1.4% to $1.11 billion in Fiscal 2009
Heinz manufactures and sells our branded products through five operating segments that are primarily organized by geographical area:
- North American Consumer Products – Includes operations in the U.S. and Canada that primarily manufacture, market and sell ketchup, condiments, sauces, pasta meals and frozen potatoes, entrees, snacks and appetizers. Fiscal 2008 sales: $3.01 billion (+9.9% growth). Fiscal 2009 sales: $3.14 billion (+4.1% growth).
- Europe – Includes operations in the UK, Ireland and Europe (including Eastern Europe and Russia) that manufacture, market and sell products in all of the Company’s core categories. Fiscal 2008 sales: $3.53 billion (+14.8% growth). Fiscal 2009 sales: $3.41 billion (-3.4%).
- Asia/Pacific – Includes operations in Australia, New Zealand, India, Japan, China, South Korea, Indonesia and Singapore that manufacture, market and sell products in all of the Company’s core categories. Fiscal 2008 sales: $1.60 billion (+21.2% growth). Fiscal 2009 sales: $1.63 billion (+1.7% growth).
- U.S. Foodservice – Includes operations in the U.S. that manufacture products including ketchup, condiments, sauces and frozen soups, desserts and appetizers for restaurants, commercial and non-commercial food outlets and distributors. Fiscal 2008 sales: $1.56 billion (+0.2% growth). Fiscal 2009 sales: $1.51 billion (-3.4%).
- Rest of World – Includes operations in Africa, Latin America and the Middle East that manufacture, market and sell products in all of the Company’s core categories. Fiscal 2008 sales: $367.7 million (+18.7% growth). Fiscal 2009 sales: $468.0 million (+27.3% growth).
By the end of Fiscal 2009, Heinz had achieved 16 consecutive quarters of organic sales growth4 (volume plus price).
Heinz's Four-Year Organic Sales Reconciliation to Reported Sales.
The Company also reported strong operating free cash flow5 of $895 million in Fiscal 2008 and $880 million in Fiscal 2009, which enabled Heinz to continue raising the common stock dividend for our shareholders.
(4) Organic sales were adjusted for approximate impact of 7% for the extra week in Q4 Fiscal 2006 and one less week in Q4 Fiscal 2007, and Q1 and Q2 of Fiscal 2006 were not restated for discontinued operations
(5) Operating free cash flow is cash from operations less capital expenditures net of proceeds from disposals of PP&E
To learn more about Heinz’s growth and financial performance in Fiscal Years 2008 and 2009, please review our annual reports.